The Clothing Manufacturers Association of India (CMAI) has expressed concern over the rate-rationalisation proposal initiated by the Group of Ministers (GoM) led by Bihar Deputy Chief Minister Samrat Chaudhary involving ‘significant changes to GST rates’ for the apparel sector.
According to the recommendations, readymade garments priced up to ₹1,500 will continue to attract 5% GST while those costing ₹1,500-₹10,000 will face a sharp increase in GST with a levy of 18%. Apparel priced more than ₹10,000 may be placed under the highest slab of 28%.
The CMAI said the revision in tax rates could pose challenges for the apparel industry and can have a ‘grave impact’ on manufacturing, pricing and consumer demand.
“The proposed GST rate hike risks severely disrupting the formal retail sector by driving both consumers and businesses toward informal channels. This shift would adversely affect legitimate retailers and potentially benefit unscrupulous sellers and illegal merchants. The textile industry, already under strain, could face potential one lakh job losses,” CMAI said in a statement.
Santosh Katariya, President, CMAI said, “The proposed GST rate revisions pose a significant threat to the apparel industry as a whole, which is already facing challenges like drop in consumer demand, profit erosion and working capital issues.”
“While we acknowledge the government’s commendable step of raising the 5% GST threshold from ₹1,000 to ₹1,500, benefiting the weaker segments, the middle class, which forms a significant portion of the consumer base, remains disproportionately impacted by these hikes,” he said.
“If implemented, it could lead to closures of MSMEs in our sector, further destabilising an industry that plays a vital role in employment and economic growth. A uniform GST rate of 5% was conducive and offered a practical solution to these challenges,” he added.
Rahul Mehta, Chief Mentor, CMAI, said , “The government must consult industry stakeholders to fully understand the implications and avoid further challenges before making decisions. The government’s commitment to ease of doing business should reflect in their actions, supporting with policies that drive growth, reduce obstacles, and help the industry to thrive.”
In light of these concerns, the CMAI has urged the government to drop the proposed GST rate revisions.
Meanwhile, the Retailers Association of India (RAI) has expressed concern over the proposed GST rate increases on apparel, shoes, handbags, cosmetics and watches, as they could have far-reaching consequences for the formal retail sector and consumer sentiment.
Kumar Rajagopalan, CEO, Retailers Association of India (RAI), said, “Increasing GST rates will hurt formal retail businesses and encourage unorganised markets to grow. This could undo the progress made in formalising businesses under the GST regime.”
“To boost GST collections, the focus should be on lowering rates and improving compliance, not raising taxes that burden consumers and disrupt the retail sector,” he said.
The RAI has urged the GST Council to consider the broader economic implications and explore more balanced approaches to achieve higher collections without harming the formal retail ecosystem or consumer sentiment.
Published – December 04, 2024 07:23 pm IST
