The Clothing Manufacturers Association of India (CMAI) has voiced serious reservations over the rate change proposals on Goods and Services Tax (GST) for the apparel sector. The Group of Ministers (GoM), led by Bihar Deputy Chief Minister Samrat Chaudhary, recommended huge rate hikes. Ready-made garments priced up to Rs 1,500 will be retained at 5 percent GST under the new proposal. However, for those priced in the range of Rs 1,500 to Rs 10,000, the rates will go up to 18 percent, while garments above Rs 10,000 will go into the highest bracket of 28 percent.

Effects on the Apparel Industry

The CMAI is concerned that these changes may adversely affect the apparel industry. They feel that the rate hike will upset the formal retail sector by pushing consumers and businesses to informal channels, thus harming genuine retailers while allowing unscrupulous sellers to thrive. The textile industry, already under stress, will lose up to 100,000 jobs. It will result in big income loss and squeezes to profitability among the small and medium enterprises (SMEs) that work on spinning, weaving, and garment manufacturing businesses with low profit margins.

Threats to Livelihood and Economic Impact

In terms of the proposed GST rate increase, it is perceived as a threat to people engaged in handloom and wool businesses. The handloom industry, which engages around two million weavers, would be affected by a loss of income of up to 25 percent, which jeopardizes traditional business models as well as market access. As many as 1.2 million people in organized sectors and two million related to the wool industry also see a negative impact. The CMAI warns the tax hike would lead to price inflation, compounded challenges in the case of price-sensitive consumers, especially women, as well as consumption related to celebrations and festivals, causing a possible setback to the economy.

Calls for Consultation and Revisions

CMAI president Santosh Katariya explained that the proposed GST rate revisions are a significant threat to the apparel industry, especially as it is already in a state of reduced demand from consumers, erosion in profit, and working capital troubles. He appreciated the government's step of raising the 5 percent GST threshold from Rs 1,000 to Rs 1,500 and said that the middle-class segment continues to be disproportionately burdened by these hikes. CMAI chief mentor Rahul Mehta said that the government should consult industry stakeholders before taking a decision and understand the full implications of the same. The CMAI has urged the government to scrap the proposed GST rate revisions, saying that policy changes should support the growth and stability of the apparel industry.