Indian apparel industry opposes GoM’s proposed GST hike, citing threat to growth
06 December 2024, Mumbai
The Group of Ministers (GoM) on Rate Rationalization, chaired by Bihar Deputy Chief Minister Samrat Chaudhary, has recommended significant GST revisions for the apparel sector. Readymade garments priced up to Rs1,500 will retain a 5 per cent GST rate, but those between Rs1,500 and Rs10,000 are set to be taxed at 18 per cent, while garments above Rs10,000 will attract 28 per cent GST.
The Clothing Manufacturers Association of India (CMAI) has raised alarm, highlighting the detrimental effects of these changes on manufacturing, employment, and consumer demand. CMAI President Santosh Katariya expressed concerns over the middle class bearing the brunt of these hikes, warning of potential MSME closures and job losses. SMEs, which operate on thin profit margins of 1-3 per cent, face heightened financial pressures, risking over one lakh job losses across spinning, weaving, and garmenting sectors.
The handloom and wool industries, employing millions, also risk income declines, threatening livelihoods and heritage crafts. Rahul Mehta, Chief Mentor of CMAI, stressed that the apparel industry, crucial to India’s economy, requires supportive policies to boost sales amid weakened demand. He urged the government to prioritize stakeholder consultation and policy stability.
CMAI emphasized that the proposed hikes would drive consumers to informal markets, undermining compliance and tax revenue. A comparison with luxury goods taxation highlights the disparity Rs10,000 garment could face a higher GST thanRs1.5 lakh mobile phone.
The association advocates maintaining a uniform 5 per cent GST rate to protect jobs, ensure stability, and sustain economic contributions. CMAI called on the government to rethink the proposal, warning of disruptions that could derail growth in the already struggling apparel sector.
