Compliance, Cost, and Competitiveness: GST’s Triple Impact on Bangalore's Textile Industry

Abstract

The textile sector in Bangalore, a key player in India's employment and exports, has been notably transformed by the introduction of the Goods and Services Tax (GST). This research examines the threefold effect of GST on textile businesses concerning compliance difficulties, increasing operational expenses, and changing competitiveness factors. Employing a mixed-method approach, data collection occurred from 75 textile units spanning micro, small, and medium enterprises in significant areas like Peenya and Chickpet. Descriptive statistics and cross-tabulation were used to analyze quantitative data, whereas qualitative insights from interviews were structured within a SWOT framework. Results indicate that micro and small businesses face an unequal load owing to low digital preparedness, significant reliance on outside advisors, and postponed input tax reimbursements. Average compliance expenses for micro enterprises increased by more than 230% after GST implementation, and 63% indicated they lost customers due to registration discrepancies related to GST. Conversely, medium-sized companies utilizing ERP systems and having internal tax departments showed greater flexibility and enhanced export outcomes.

The research highlights systemic shortcomings in digital infrastructure, awareness, and policy implementation. It promotes GST reforms tailored to specific sectors, easier compliance for MSMEs, and localized assistance in regional languages. The paper concludes that although GST provides long-term advantages for well-organized firms, in the absence of targeted measures, it may marginalize smaller participants and increase the performance disparity in Bangalore’s textile ecosystem.