Apparel Industry Alarmed Over Proposed GST Increase

(MENAFN- KNN India) New Delhi, Sep 3 (KNN) India's apparel sector is voicing serious concerns over the government's proposal to raise Goods and Services Tax (GST) on garments priced above Rs 2,500-from 12% to 18%.

Industry leaders warn that the hike could deal a severe blow to an already struggling sector.

The Clothing Manufacturers' Association of India (CMAI) said the move could prove to be the“death knell” for the industry, which is still grappling with weak domestic demand and the impact of global trade disruptions, including U.S. tariff wars.

CMAI stressed that garments priced above Rs 2,500 should not be classified as luxury goods.

Many of these products, including woollens, hand-crafted pieces, and festive or wedding attire, are expensive because of high raw material costs and labor-intensive production. These categories employ over 12 million people, particularly women and semi-skilled workers.

Industry experts fear that higher GST will make such apparel less affordable for middle-income families, shrinking demand further. Rahul Mehta, Chief Mentor at CMAI, pointed out that the sector is already facing multiple headwinds: falling exports, rising input and logistics costs, shrinking consumer spending, and cash-flow crises caused by longer payment cycles, which have stretched from 45 days to nearly 120.

With businesses unable to absorb additional costs, manufacturers warn that passing on the tax burden to consumers will dampen sales and threaten the survival of several players in the organized apparel segment.

CMAI has urged the government to reconsider the proposal, highlighting that instead of boosting revenues, a higher tax rate could disrupt the industry's fragile recovery and jeopardize millions of livelihoods.

(KNN Bureau)

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