India’s apparel manufacturing association is concerned that the proposed hike in GST on garments priced over Rs 2,500 will “spell a death knell” for an industry that is already “struggling under the crisis of American tariff wars”.
The country’s middle class generally purchases garments above this price point, and an 18 per cent GST will lead to increased shopping expenses for them.
The Clothing Manufacturers Association of India contends that these higher-priced garments are more costly due to the quality and cost of raw materials, as well as the skilled handwork involved in their production. Currently, the GST on garments priced above Rs 2,500 is 12 per cent .
“If the GST council does, in fact, keep Rs 2,500 as the cut-off level for the 5 per cent slab, and charge all products above this level at 18 per cent , it will mean a cruel blow to the middle class and the organised sector of garment manufacturers, who are the worst affected by the tariff wars,” said CMAI on Monday.
The industry, which employs 12 million people, fears that this could lead businesses to resort to informal practices such as under-invoicing and downgrading quality to stay below the cut-off level.
Categories like wedding attire, sustainable clothing, woollen garments, handloom, and embroidered pieces are inherently more expensive due to the nature of raw materials and the craftsmanship involved.
Woollen garments, a crucial clothing item in northeastern states, are currently priced between Rs 3,500 and Rs 7,000, and an 18 per cent GST will further increase these prices. Likewise, the prices of traditional and artisan-made clothing—which are costly due to their handmade nature and the time taken to produce individually crafted pieces—will also rise.
