Apparel industry opposes GoM's proposed GST hike, citing growth concerns
Even as the upcoming GST council is yet to decide on the likely proposal of the group of ministers on rate rationalisation over hiking GST rates on luxury readymade garments and lowering rates on affordable range, the development seems to have not augured well with the apparel industry.
The industry expects the proposed GST hike to affect growth and has urged the government to discard any rate revisions as the intent of the government should be to streamline the tax structure in a way that makes products affordable for consumers and strengthen the apparel industry’s growth and stability.
Santosh Katariya, President, Clothing Manufacturers Association of India (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 Rs.1,000 to Rs.1,500, benefiting the weaker segments, the middle class, which forms a significant portion of the consumer base, remains disproportionately impacted by these hikes."
"If implemented, it could lead to closures of MSME’s 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. It ensured stability across the value chain, minimized disruptions, and avoided any adverse impact on exports. Moreover, the prevailing rate supported the industry without causing drop in GST collections, fostering both economic growth and ease of doing business,” Katariya added. He also urged the government to avoid implementing the new tax structure.
Industry shared that 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.
