GST rate hike to cripple India's garment industry: Clothing Manufacturers Association of India

New Delhi: The government’s proposal to increase tax on garments priced over Rs 2,500 by putting them in a higher slab of 18% under the proposed goods and services tax (GST) reforms, will impact the middle class consumers and organised manufacturers, Clothing Manufacturers Association of India (CMAI) said Tuesday.

Almost the entire range of woolen garments, which are essential clothing for the middle-class, are currently priced between Rs 3,500-7,000, it said. It also cautioned that wedding apparel and traditional handmade clothing would become unaffordable.

Noting that despite repeated assurances from various quarters, there are reports that garments above Rs 2,500 are likely to be taxed at 18% from their current level of 12%, it said: “This will spell a death knell to the industry already reeling under the crisis of the American tariff wars”.

CMAI is an association of the Indian apparel industry, having over 5,000 members including manufacturers, exporters, brands and ancillary industry.

“Putting such garments in the 18% slab will mean the middle class Indians will have to pay more during the bitterly cold winters, it said as it flagged several challenges the higher GST would lead to- steeper costs for middle-class consumers to erosion of traditional handloom and artisan-based clothing, as well as a potential pushback of the sector into the informal fold.

It also stressed the implications for livelihoods as India’s garment industry directly employs over 12 million people, largely women and semi-skilled or unskilled workers.