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New tax may threaten garment sector, already 'reeling' from tariff wars, warns CMAI
If the GST Council does in fact keep Rs.2,500 as the cut-off level for the 5% slab, and charge all products above this level at 18%, it will mean a cruel blow to the aspiring middle class and the organized sector of garment manufacturers – who are the worst affected by the Tariff Wars, according to CMAI.
The Industry is already in the midst of an unprecedented crisis with the US Tariff wars.
In spite of repeated assurances from various quarters, there are continuous reports that Garments above Rs.2500 are likely to be taxed at 18% - from their current level of 12%, as per Clothing Manufacturing Association of India (CMAI).This will spell a death – knell to the industry already reeling under the crisis of the American tariff wars, according to CMAI.
If the GST Council does in fact keep Rs.2,500 as the cut-off level for the 5% slab, and charge all products above this level at 18%, it will mean a cruel blow to the aspiring middle class and the organized sector of garment manufacturers – who are the worst affected by the Tariff Wars.
These are sections of the industry which manufacture products which are more expensive not because they are consumed by the affluent Class, but because by the very nature of the cost of Raw Materials and artistic hand-work involved.
For instance:
- Almost the entire range of Woolen Garments, which are essential clothing for the middle-class in the entire North, North-East, and East India, are currently priced between Rs. 3500 to Rs.7000. Putting such Garments in the 18% slab will mean asking middle-class indians not to wear woolen clothes during the bitterly cold winters.
- Wedding clothes: It is the dream of every parent to dress their child in the best possible wedding clothes they can afford – and even at the lowest middle-class levels, the wedding clothes cost anywhere between Rs.10,000 – 15,000 upwards. Putting these clothes in the 18% slab will result in parents compelled to make inferior clothing for their favourite child on their favourite day.
- Traditional and Artisan made clothing: Due to its character of being hand made, and the time taken to produce individually crafted pieces, most of these products are expensive – and almost certainly above Rs.2,500. Putting these garments in the 18% slab will kill the traditional craft and hit the artisan community hard.
- Government and Industry Associations have worked hard to move the Industry which was traditionally in the informal sector to the Formal Sector. This move will negate all efforts and take the industry back to the informal sector.
- The Industry is already in the midst of an unprecedented crisis with the US Tariff wars.
At this time, the need of the hour is a strong, resilient, and vibrant Domestic Sector. If the Domestic Sector is also hit by such an unprecedented price increase in large product categories, it will spell the death – knell for the industry. CMAI urges the hon prime minister to use his good offices to intervene and ensure that such drastic damage is not done to the garment industry, which is the lifeline of india’s textile heritage, and employer of over 12 million Indians, comprising largely of women, and semi-skilled and unskilled workforce.
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