-By Nachiket Hanmantgad
“The Union Government should be proud of, if not for accomplishing their objective, but for progressing in the right direction.”
Belagavi, the ever buzzing city in Karnataka is famous for many things such as education, health care, politics, and manufacturing and not to mention the lovely climate and the foodies paradise which it has been. Manufacturing sector has been the pride of belgamites, as Belagavi meets the supplies of many MNC`s like TATA Motors, Mahindra and Mahindra, TVS, etc and also the prestigious ISRO. The Position Sensor in the ISRO`s Mars Orbit Mission (MOM) was supplied by the Servo Controls Aerospace India Pvt Ltd of Belagavi. Everybody is aware of the presence of Aequs SEZ in Belagavi.
As Belagavi is contributing significantly to the country in the manufacturing sector, it is important to observe impact of GST. The impact during initial period of implementation (July-August,2017) and the impact after six months (December-January,2017-18) of implementation.GST was introduced mainly to promote “ease of doing business”, “eliminate cascading effect” and “Streamline the interstate movement of goods”.
The Union Government should be proud of, if not for accomplishing their objective, but for progressing in the right direction. As I interacted with manufacturers in Belagavi, I observed that they are very much optimistic with the GST. It has not only benefited them in ease of business but also they have realised how important is GST in future. Apart from initial hiccups the adoption to GST for all the manufacturers has been smooth. Important aspect that I observed was that all the manufacturers have accepted the existence of general tendency of resistance to change, and they have suggested to Government not to bother regarding the negative comments regarding GST and should only concentrate on improving and streamlining the process of filing GST. And rightly so the Government is also doing the same thing as it has done many changes in tax slabs in series of GST Council Meeting, latest one being the 25th GST Council Meeting held last month.
According to Mr Rupesh Accounts Manager at Enerzi Microwave Systems Pvt Ltd, a leading brand in manufacturing of industrial Microwave Heating Systems since 2007 the transition initially was very troublesome, but as of December-17 he says still there is issue with the website. The problem he is facing includes no updating of the GST returns filed on the website, and if filed again the system shows the returns has already been filed. Another important aspect that has affected Enerzi Microwave and also many of other companies is that the credit cycle from the supplier has reduced due to GST. But it’s not a major concern to any of them as they have reduced the credit period to their customers as well. Though there has been a considerable change in the prices of the supplies and other consumables it has been transferred to the customers. And this has not lead to any change in turnover of the companies.The positivity’s of GST are so much that the disturbances are negligible according to all of the manufacturers.
One more notable point to observe is the online purchase by the manufacturers. Though there were many B2B (Business to Business) e-commerce portals such as IndiaMart.com, Alibaba.com etc dedicated to industrial purchases. They had not had much of impact unlike B2C portals such as Amazon.com, Flipkart.com. Mr Rahul Phadke the Managing Director of Prime Industries opined that post GST he has been able to purchase his raw materials online, giving way to access higher quality and innovate products without affecting the budget. One of the concerns he has raised is that some of the suppliers had to reduce the price of supplies but have not. And given the years of association with the suppliers he is hopeful that they would do it in coming days. He is very much happy with the system as he has to deal with only on authority against four authorities earlier. Mr G R Deshpande the Head of Finance at AKP Foundaries, who has more than 30 years of experience in the corporate finance and who has also seen the implementation of VAT in Karnataka, opined that the businesses in Karnataka may not face much of the problem in transition to GST as it is similar to filing VAT returns. According to him, his organisation has not faced any major issue post GST other than the initial system problem. The minor issues regarding the tax credits have been overcome by their organisation as their suppliers and the customers have been very responsive to them post GST. He even recalled the days of implementation of VAT during which same atmosphere of resistance to change was shown by the business fraternity but as days passed on everyone got used to it. According to him and also the chairman Mr Ram Bhandari it is going to take at least one year for everyone to adapt completely to GST. Mrs Jothsna Pai the managing partner of Pai foods, the leading manufacturer of bread and other bakery products was very happy with the GST as it has lead to decrease in composite tax from 4% to 2%, and the procurement Oil from Kolhapur, Maharashtra has been quicker due to abolition of the check posts. She is a bit concerned about the Edible oil falling under 5% tax slab as she has not increased the selling price of any of the products. Pai Foods being the Belagavi only company, she is competing with the outstation brands. The quality of Pai Foods products has prevented other outstation brands from penetrating into the Belagavi market. She is a bit sceptical about changing prices of products. As of now she is waiting for the competitor’s reaction for the change in price of raw material. Though she does not enjoy the scale of business of the outstation brands, she is ready to bear a temporary burn of crunch in profitability due to increase in Oil and Dalda prices by not passing on the burden to consumers.
Mr Dilip Kulkarni the finance manager at Netalkar Power Transimission said that their organisation absolutely had no problem in adapting to GST. Though he and all others also opined that the GST helpline created by the Government was of no help to them.
As part of the suggestion most of them suggested that they would be happy to file return in one go, one window rather than GSTR-1, GSTR-2, GSTR-2B. Mr G R Deshpande of AKP foundries say “Looking at the changes GST council has been making post GST implementation, sooner or later the government will zero down to one window GST filing system”. He also had the opinion that the Union Government implemented the GST in haste, rather it could have taken some more time to educate the masses, streamline the GST system, make even more improvements in the GST Bill from previous government bill and implement without any issue whatsoever.
Overall the manufacturing sector has been successfully adapted to GST and is seeing the positive impact of it on their business. The government must keep on improving system without affecting the businesses. And soon reach the “one window” GST filing system. Though the GST portal has been improved since its inception in July, still certain minor discrepancies exist in the present system. Having seen the IRCTC portal not being responsive as expected, irrespective of the government and the minister, it is certainly going to take time for the Government to improve the responsiveness of the GST portal. Nevertheless, the optimism lies in the push of “Make in India” by honourable Prime Minister Shri Narendra Modi, on which the GST has direct impact.