India's Garment Industry Warns Against Proposed GST Hike on Clothing Above ₹2,500
The Clothing Manufacturers Association of India (CMAI) has expressed serious concerns over the government's plan to increase GST on garments priced above ₹2,500 from 12% to 18%. CMAI warns this could be a 'death-knell' for the industry, affecting middle-class consumers, potentially shifting businesses to the informal sector, and risking 12 million jobs. The association has appealed to Prime Minister Modi to intervene, citing the industry's existing challenges from global tariff wars and weak domestic demand.
*this image is generated using AI for illustrative purposes only.
The Clothing Manufacturers Association of India (CMAI) has raised serious concerns over the government's reported plan to increase the Goods and Services Tax (GST) on garments priced above ₹2,500 from 12% to 18%. This potential tax hike has sparked alarm within the industry, with CMAI describing it as a possible 'death-knell' for a sector already grappling with global tariff wars and weak domestic demand.
Impact on Consumers and Industry
The CMAI, which represents over 5,000 apparel manufacturers, exporters, brands, and retailers, has highlighted several key areas of concern:
Middle-Class Consumers: The tax increase would particularly affect middle-class buyers purchasing:
- Woolen garments priced between ₹3,500-₹7,000
- Wedding attire costing ₹10,000-₹15,000
- Traditional handmade clothing
Industry Shift: There are fears that the tax hike could force a significant portion of the industry back into the informal sector.
Employment Risks: The move threatens employment for over 12 million people, with a disproportionate impact on women and semi-skilled workers who form a large part of the workforce.
Industry's Appeal
In response to this proposed change, the CMAI has taken a strong stance:
- The association has urged Prime Minister Narendra Modi to intervene personally to prevent potential damage to the sector.
- They argue that the increase from 12% to 18% GST on higher-priced garments could have far-reaching consequences for both consumers and businesses in the apparel industry.
Broader Context
This development comes at a challenging time for India's garment industry:
- The sector is already facing pressures from global tariff wars, which have impacted international trade dynamics.
- Weak domestic demand has further strained the industry, making it more vulnerable to policy changes.
The CMAI's warning underscores the delicate balance between government revenue generation and supporting key industries. As the situation unfolds, stakeholders across the garment industry will be closely watching for any official announcements or policy clarifications from the government regarding the proposed GST hike.
The outcome of this issue could have significant implications for India's textile and garment sector, which is not only a major employer but also an important contributor to the country's export earnings and domestic retail market.
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