Textile Industry Voices Concerns Over Proposed GST Hike on Ready-Made Garments

The Confederation of Indian Textile Industry (CITI) has expressed concerns about the proposed increase in GST on ready-made garments. They warn that this could significantly impact the industry, employment, and the economy. CITI is urging the government to reconsider this GST hike and adopt a strategy that supports growth in the textile sector while keeping consumer prices affordable.

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Under the new proposal, garments priced up to Rs 1,500 will maintain a 5% GST rate. However, those priced between Rs 1,500 and Rs 10,000 will see an increase to 18%, and garments over Rs 10,000 will be taxed at 28%. CITI highlighted these changes as potentially harmful to both consumers and businesses.

Impact on Consumers and Economy

CITI argues that the proposed GST hike could lead to increased price inflation, particularly affecting consumers who are sensitive to price changes. Higher taxes on garments associated with celebrations and festivals could reduce consumption when demand is already low. This situation might have broader economic implications.

The textile sector plays a crucial role in India's economy by providing jobs to millions. Rakesh Mehra, Chairman of CITI, stated, "Policies must nurture its growth rather than create hurdles." He emphasized that the industry needs supportive policies to thrive rather than face additional challenges.

Concerns Over Inverted Duty Structure

CITI also pointed out issues with the inverted duty structure in the man-made fibre (MMF) segment. The varying GST rates across different stages of production hinder working capital and slow down growth. This structural issue needs addressing to ensure a smooth flow of business operations within the sector.

There is a fear that the proposed tax increase could disrupt the formal retail sector. CITI believes it may push consumers and businesses towards informal and unregulated markets. Such a shift could undermine efforts to formalise the economy and ensure fair competition among businesses.

The textile industry body is advocating for a balanced approach that considers both industry growth and consumer affordability. By doing so, they hope to protect one of India's key economic sectors from unnecessary strain while maintaining its contribution to employment and economic stability.