CMAI urges government not to hike GST rates on garments (#1684644)

The Clothing Manufacturers Association of India has urged the government not to increase Goods and Service Tax rates on clothing following a hike recommendation by the Group of Ministers which would increase tax rates on numerous ready-made garment price bands.

“The proposed GST rate hike risks severely disrupting the formal retail sector by pushing both consumers and businesses toward informal channels,” announced the CMAI in a statement, the Press Trust of India reported. “This shift would hurt legitimate retailers and potentially benefit unscrupulous sellers and illegal merchants. The textile industry, already under strain, could face job losses of up to one lakh.”
 
The Group of Ministers recommended a GST rate rationalisation which would increase GST on garments priced between Rs 1,500 and up to Rs 10,000 to 18%. The group also recommended increasing GST on garments priced above Rs 10,000 to 28% while garments priced up to Rs 1,500 would still be taxed at 5%.
 
“The proposed GST rate revisions pose a significant threat to the apparel industry as a whole, which is already facing challenges such as declining consumer demand, profit erosion, and working capital issues,” said the CMAI’s president Santosh Katariya, ET Retail reported. “If implemented, it could lead to the closure of MSMEs [micro, small, and medium enterprises] in our sector, further destabilising an industry that plays a vital role in employment and economic growth.”