GST rate hike could cripple India’s garment industry, warns CMAI
The Clothing Manufacturers Association of India (CMAI) has issued a strong warning against a proposed GST hike on garments, stating it could be a “death-knell” for the industry. The reported plan would raise the GST on garments priced above ₹2,500 from 12% to 18%.
CMAI argues this move would deal a severe blow to an industry already struggling with global tariff wars and weak domestic demand. The association, which represents over 5,000 apparel manufacturers, exporters, brands, and retailers, has urged Prime Minister Narendra Modi to intervene.
Here’s why CMAI believes the hike will cause “drastic damage”:
- Hurts Middle-Class Consumers: The ₹2,500 cut-off is considered arbitrary. It would make essential winter wear (priced between ₹3,500 and ₹7,000) and budget wedding attire (costing ₹10,000–15,000) unaffordable for middle-class families.
- Threatens Traditional Crafts: The higher tax rate would “kill traditional craft and hit the artisan community hard.” Handmade and artisan-based clothing, by its very nature, often falls above the proposed price threshold.
- Jeopardizes Livelihoods: The garment industry employs over 12 million people, many of whom are women and semi-skilled workers. The price increase would choke domestic demand, threatening these jobs at a time when exports are already facing global disruptions.
- Drives Industry Back to Informality: The government has been trying to formalize the apparel sector. However, the CMAI warns that the higher tax could force manufacturers back into unorganized, informal channels to survive, negating all progress made.