Proposed GST Hike for Apparel Sector Sparks Industry Backlash

New Delhi, Dec 5 (KNN) The Group of Ministers (GoM), led by Bihar Deputy Chief Minister Samrat Chaudhary, has recommended significant changes to Goods and Services Tax (GST) rates for the apparel sector. 

The proposal suggests readymade garments priced up to Rs 1,500 will continue to attract 5 per cent GST, but garments costing Rs 1,500 to Rs 10,000 would face a sharp increase to 18 per cent. Apparel priced above Rs 10,000 may be placed in the 28 per cent GST slab.

The Clothing Manufacturers Association of India (CMAI) has expressed grave concerns, warning that the revisions could disrupt manufacturing, pricing, and consumer demand. 

In a statement, CMAI projected potential job losses of up to one lakh and cautioned that the hikes might shift the market toward informal, unregulated channels.
CMAI President Santosh Katariya said the industry, already grappling with declining consumer demand and profit erosion, faces heightened risk. 

“While the increased threshold for 5 per cent GST from Rs 1,000 to Rs 1,500 provides relief to lower-income groups, the middle class remains disproportionately affected by these hikes,” he stated, adding that the changes could trigger MSME closures, destabilising a sector critical to employment and economic growth.

Rahul Mehta, Chief Mentor at CMAI, emphasized the need for stakeholder consultation, urging the government to avoid policies that hinder growth. “A uniform GST rate of 5 per cent was practical and conducive to stability,” he remarked.

The Retailers Association of India (RAI) echoed these sentiments, highlighting potential damage to the formal retail sector and consumer sentiment. 

RAI CEO Kumar Rajagopalan stated, “Higher GST rates will encourage unorganised markets, undermining the progress made under the GST regime.” He advocated for reduced tax rates and enhanced compliance to boost collections without burdening consumers.

Both organizations have called on the GST Council to reconsider the proposed revisions, stressing the need for balanced approaches to support industry growth and economic stability while ensuring fair tax compliance.

The proposal has ignited a broader debate about the economic implications of GST adjustments on critical sectors, consumer affordability, and market formalisation.

(KNN Bureau)