Hike in GST will result in clothing becoming costlier: Industry bodies

16 December 2021, Mumbai:

Clothing and footwear have got expensive for Indian consumers. Due to raw material cost pressures, industry players have had to increase prices by about five per cent to ten per cent across various categories and with the hike, in GST the overall price impact on the footwear sector could range between 10 to 15 per cent this fiscal year.

The GST hike is on items that are priced below Rs1000 and hence the impact will be felt entirely by price-conscious consumers or consumers from poor socio-economic backgrounds.

This is expected to impact consumption and push smaller players to the unorganised segment. The hike in GST rates will adversely impact 85 per cent of the textile and apparel value chain but the challenge of the inverted duty structure is faced only by 15 per cent of the industry value chain.

Industry associations such as the Clothing Manufacturers Association of India (CMAI), Retailers Association of India (RAI), and Confederation of All India Traders have sent various representations to the Centre to reconsider this decision. The textile industry associations also met the Finance Minister recently.

Clothing and footwear is one of the six groups in the consumer price index and has a combined weight of 7.36 percent. It has been on the rise since May this year and in November it reached the highest level after August 2014 when it had touched 8.04 per cent.

Inflation is expected to flare up when the uniform GST rate for the textile and footwear sector comes into effect from January 2022.

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