It is a difficult time for numerous sectors across the nation as the GST is trying to cover up all those into strict compliance. With this into effect, the bicycle industry is also under the problems of tax rates and input tax credit all at once.
Punjab which is a mass producer of bicycles with on an average 75 percent of bicycles made in its state and around 90 percent of the bicycles parts manufacturing is soaring under the GST. While before GST implementation, there was series of taxes ranging till 12 percent but as soon as the GST applied, there is now single 12 percent GST applicable on all the product range.
A range of peddles, seat-covers, ingots and rods of bicycle parts manufactured by the small manufacturers who are under contract with the big companies spoke that the transition in new regime is not easy and are facing various challenges. In this issue, a pedal manufacturer told that “We buy our raw material, plastic, at 18 per cent GST and sell the cycle parts at 12 per cent. What about our immediate 6 per cent loss? We don’t have clarity about that refund yet.”
In Punjab alone, there are around 4 thousand units who are working on the production of bicycle and its parts employing lakhs of people. An another producer from the chain mentioned that “Our own capacity to produce parts has taken a hit because in effect there are still multiple GST slabs. When we are affected, naturally the working hours and wages for labour also reduce.”
It is clearly seen from the market conditions and by the speculations, that there is a downward in sales projection by 30 to 40 percent after the implementation of GST. One of the retailers mentioned that “In one cycle there are three rates of GST that are levied- 1) tyre tubes – 5 per cent, 2) complete cycle – 12 per cent and 3) the bell is taxed at 18 per cent. Nobody can understand this logic. The bicycle is considered a common man’s transport, for low-income groups. But today even fancy cycles are not being bought.”
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All the international brands are also stating the same situation and have alerted that the steps must be taken as soon as possible to take down some impact on the positive side. Omkar Pahwa, Chairman of Avon Cycles mentioned that “If we talk about Punjab, we have slashed our prices by 6 per cent and are charging 12 per cent GST so that the consumer demand is maintained. Earlier we would charge 8 per cent tax and our prices were also higher but now customers in Punjab will benefit. There are some states where there was earlier no VAT (Value Added Tax) like UP, MP and Chhattisgarh. Cycles there will be 2-4 per cent more expensive (now). But ultimately, everybody will have to come under this net.”