GST revised: Apparel would cost 20% higher, causing a major reaction from the Indian sector

22 November 2021, Mumbai:

Apparel sector organisations from around the country are speaking out against the GST increase. The garment industry is concerned about the future of its business since the GST increase would have a negative impact. Even without the GST rate hike, the market was expecting a 15-20% increase in garment costs in the coming season.

"CMAI, along with associations and trade bodies from all over India, have been vigorously representing to the Government and GST Council not to implement this change, and it is indeed extremely disappointing that the Council has chosen not to heed their plea," said Rajesh Masand, President, Clothing Manufacturers Association of India (CMAI).

it's worth noting that under Rs. 1,000 clothes account for nearly 80% of India's clothing sector, according to the report.

"As raw materials become more expensive, end product costs have already risen. An increase in GST will increase this cost even more, and firms will lose cost-competitiveness in the worldwide market to their competitors.

"Large shops have already transferred their sourcing to Vietnam and Bangladesh, which benefit from free trade agreements and can thus provide lower costs," said Chintan Thaker, Chairman of the Assocham Gujarat State Council.

However, just a few industry participants are ecstatic about the new tax system. "The synthetic value chain featured an inverted duty structure, with 18% duty on fibre, 12% duty on yarn, 5% duty on fabric, 5% duty on garments under Rs. 1,000 per piece, and 12% duty on garments beyond Rs. 1,000."

This used to result in a large amount of input tax being accumulated, and getting refunds was a problem. These issues would be resolved with a consistent tax system, according to Pramod Choudhary, previous president of the Synthetic and Rayon Textile Export Promotion Council (SRTEPC).

CMAI, on the other hand, feels that this policy is utterly wrong since it was purportedly proposed largely to solve the Inverted Duty Structure that exists in a segment of the business – and this sector accounts for less than 15% of the whole industry.

As a result, to address an issue that affects 15% of the business, this approach will have a negative impact on 85% of the overall industry. The Madhya Pradesh Thok Kapada Vyapari Association is preparing a demonstration against the rise in Madhya Pradesh.

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