New Delhi, 29 Oct (KNN) The Goods and Services Tax (GST) Council has planned to increase the rates from 5 per cent to 12 per cent for garments across all price categories.

This decision will significantly hamper the MSME sector as the increased GST rates will create bottlenecks for the industry which is still recovering from the aftermath of the second wave of covid-19.

Commenting on this, Dr. Animesh Saxena- Manging Director Neetee Apparels- a leading garment exporter and President of Federation of Indian Micro and Small & Medium Enterprises (FISME) told KNN that this decision is definitely going to affect garment manufacturers as prices will go up, however it is important to understand the key reasons why the GST council has proposed these amends.

“It is due to the input cost such as yarn which has a GST of 18 per cent with no recovery, and to address that the government is contemplating these changes,” explained Saxena.

“Government should rather address the inverted duty structure and work on the refund mechanism,” suggested Saxena.

This would help the common man who buys cheaper garments which is lower than INR 1000 and wouldn’t hurt the garments manufacturers and MSMEs.

The current price is 12 per cent for garments above INR 1000 and 5 per cent for below INR 1000, and the government has proposed charging the same price on garments priced below INR 1000.

For latter the GST rate will be doubled which will impact the garment manufacturers drastically.

India’s domestic textiles and apparel industry has a share of 2 per cent of India’s GDP and 12 per cent of the country’s export earnings.