The planned GST rate increase, which was suggested by the Group of Ministers (GoM) on rate rationalisation, has caused the clothing industry to voice grave concerns. Clothing purchased between Rs. 1,500 and Rs. 10,000 will be subject to 18 per cent tax under the new tax system, while clothing priced over Rs. 10,000 would be subject to the highest GST slab of 28 per cent. The 5 per cent rate would continue to apply to clothing up to Rs. 1,500.
The government has been encouraged to reevaluate the raise by the Clothing Manufacturers Association of India (CMAI), which has warned that it may result in a decline in consumer demand, a large loss of jobs, and disruptions in the value chain of the industry.
The CMAI also urged the government to at least keep the current rates constant, arguing that a uniform GST rate of 5 per cent would be more advantageous for the sector and more practicable.
“The garment industry as a whole, which is already dealing with problems including dwindling consumer demand, profit erosion, and working capital constraints, is seriously threatened by the planned changes to the GST rate. The closure of MSMEs in our sector could result from its implementation, further destabilising a sector that is essential to job creation and economic expansion, according to CMAI president Santosh Katariya.
Concerned about the planned changes to the GST rate on ready-made clothing, the Confederation of Indian Textile Industry (CITI) has issued a warning about the possible wide-ranging effects on the textile sector, jobs, and the economy as a whole.
Price-sensitive consumers will be disproportionately impacted by the anticipated increase in price inflation brought on by the proposed GST hike. In order to promote growth in the textile industry and maintain consumer affordability, CITI has encouraged the government to reevaluate the planned increase in the GST rate and take a more balanced approach.
“At a time when demand is already under strain, higher taxes on clothing associated with festivals and celebrations will decrease consumption. Millions of people in India depend on the textile industry for their livelihoods, thus this could have a knock-on effect on the economy. Policies should support its expansion rather than obstruct it, according to CITI Chairman Rakesh Mehra.
