Will reduce demand, lead to job losses: Apparel body on proposed GST hike

The body has urged the government to reconsider the hike, warning that it could lead to reduced consumer demand, widespread job losses, and disruptions in the industry's value chain

The apparel industry has expressed serious concerns over the proposed GST rate hike recommended by the Group of Ministers (GoM) on rate rationalisation.

Under the new tax structure, garments priced between Rs 1,500 and Rs 10,000 would be taxed at 18 per cent, while apparel above Rs 10,000 would fall under the highest GST slab of 28 per cent. The rate for apparel priced up to Rs 1,500 would remain at 5 per cent.

The Clothing Manufacturers Association of India (CMAI) has urged the government to reconsider the hike, warning that it could lead to reduced consumer demand, widespread job losses, and disruptions in the industry's value chain.

 

The association emphasised the need for government policies that support the growth and stability of the industry, advocating a balanced approach to ensure long-term sustainability and benefits for all stakeholders.

"The proposed GST rate hike risks severely disrupting the formal retail sector by pushing both consumers and businesses toward informal channels. 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," CMAI said in a statement.

The CMAI further suggested that a uniform GST rate of 5 per cent would be more practical and beneficial for the industry, urging the government to at least maintain continuity in the existing rates.

"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. If implemented, it could lead to the closure of MSMEs in our sector, further destabilising an industry that plays a vital role in employment and economic growth," CMAI president Santosh Katariya said.

Katariya also questioned the rationale behind taxing clothing priced over Rs 10,000 at 28 per cent while mobile phones priced up to Rs 1.5 lakh are taxed at 18 per cent.

Industry stakeholders fear that the increased tax burden could further erode profit margins and intensify job losses.