Powerloom accounts for more than 86 percent of the total MMF production in India while the rest comes from other segments like handlooms, hosiery and mills. Incidentally, the GST on cotton textile products has been fixed at 5% while GST on man-made fabric (MMF) is kept at the proposed 18% due to which powerloom units will take a hit, industry officials said.

J Thulasidharan, chairman, Confederation of Indian Textile Industry (CITI) said that if rates are not reduced then there will be flooding of the fabric from China which would wipe out powerlooms. Powerlooms alone employ around 65 lakh workers in 5.5 lakh units spread across the country.

Also the SME (small and medium enterprises) and those who do not have composite mills are going to suffer from excessive competition and high cost.

These players have majority share in fabric production of the country, the CITI chairman said.

An independent weaving unit having around 50 looms and producing 100% viscose fabric would incur an additional cost of over Rs 2 lakh per annum with 18% GST rate on yarn when compared to a composite unit, said M Senthilkumar, chairman, Southern India Mills' Association (SIMA).

Even with 12% GST rate on synthetic yarn, the additional cost would be Rs 1.3 lakh per loom per year thus creating unhealthy competition between the composite and independent weaving units.