JOIN USRevised GST rate on apparel to hit hosiery manufacturers, buyers
A recent government amendment to the Goods & Services Tax (GST) rate on apparel from January, next year, will force buyers from weaker sections to shell out more, as much as it may affect the smaller manufacturers, claim hosiery manufacturers.
The change in GST rate from 5% to 12% for fabrics and garments priced below Rs 1,000 will make the final product in this range costly. The Federation of Hosiery Manufacturers Association of India (Fohma) suggests that around 85% of players in the garments industry, across the country, operate with products priced under Rs 1,000.
“Hosiery (and other apparels priced under Rs 1,000), for instance, priced Rs 100, will sell for Rs 112, instead of Rs 105. This is the effect at the consumer level. Additionally, this will require additional capital investment for payment of GST, at month-end, at the revised slab. Prices have already increased for raw materials, and production is already affected,” Sharad Kumar Bhatter, president, Bengal Hosiery Manufacturers’ Association told DH.
Bhatter adds that the proposed revised slab may discourage manufacturers from scaling up in the long run. This in turn could affect government revenue.
“The market is likely to see a 15% to 20% price rise in garments soon since there is an unprecedented price increase of raw materials like yarn, packing materials, and freight. It is unfortunate that those who buy clothes costing less than Rs 1,000 will be the most affected,” says Vinod Kumar Gupta, managing director, Dollar Industries Limited.
A large number of hosiery units operate in the informal sector (85%-90%), with lower investments. West Bengal, Tirupur (Tamil Nadu) constitute the most production, around 40%, and 35% respectively, an estimate suggests. Besides, Mumbai, Saharanpur, Ludhiana, Delhi, Ahmedabad, and Kanpur also have hosiery units.
Fohma, in a statement, adds: “It may further be noted that this increase does not help the entire industry, but just acts as a small measure to address the “Inverted Duty Structure” currently in place for only 15% of the entire textile chain.”
“In the last one year, raw material prices have increased. The revision in rate will add an extra burden. We request the government, and ministry concerned to consider the effects,” KB Agarwala, president, Fohma, and managing director, Rupa & Company Ltd, told DH.
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