Apparel industry red flags GST rate hike

The textile industry is unhappy with the Centre notifying the GST rate hike for several textile and apparel items effective from January 2022. Industry players say the hike from 5% to 12% will lead to price increase and job losses.

“This is a masterstroke to penalise both consumer and manufacturer with one shot. The Government is following a carrot and stick approach. The carrot is offering PLI schemes for five years and the stick is the hike in GST rate by 7%”, said KE Raghunathan, Convenor, Consortium of Indian Association.

The Clothing Manufacturers Association of India (CMAI) has also expressed its disappointment with the notification amending the GST rate on apparel.

“CMAI, along with associations and trade bodies, has been strongly appealing to the Centre and GST Council not to implement this change, and it is indeed extremely disappointing that the Council has chosen not to heed our plea”, said Rajesh Masand, President, CMAI.

Sanjay K Jain, Chairman of the Textiles Committee - Indian Chamber of Commerce, tweeted saying that consumers will now have to pay 7% extra for clothing - adding fuel to the inflation fire. Adding that cotton & yarn prices have already gone up by 60% in the last year.

CMAI said it will continue its efforts to persuade the Government and GST Council not to go ahead with this change of rate and hopes that the Government will recognize the disastrous impact the rate change will have on the industry, market and employment.

Jessy Lawrence, a member of the Federation of Karnataka Chambers of Commerce and Industry (FKCCI), said the market will go dry because of this move and wants the government to pull back the notification.

“The small manufacturers will be impacted the most by the move, all the retail sellers are objecting against it,” said Jessy.

BM Gaonkar and Shobith Gupta, founding partners at Shoolin Consultancy, a tax consultancy firm, said, “Practically, about 90% of textile manufacturing happens in the unorganized sector and raising GST rate to 12% would hit the power loom and handloom weavers.”

Watch the latest DH Videos here: