Voicing concern over GST Council’s decision imposing an 18% levy on garments priced above ₹2,500, the Telangana State Federation of Textile Associations has appealed for a 5% levy on all readymade and made-ups irrespective of their cost.

“We request the Council to impose 5% GST on all products irrespective of cost considering,” Federation president Ammanabolu Prakash said. In support, he cited how the textile and apparel sector contributes about 2.3% of the GDP, accounts for around 13% of India’s industrial production and directly employs more than 45 million people, including a large number of women and rural workers.

The decision to levy a higher rate of GST on garments priced above ₹2,500 creates a “sharp tax discontinuity between affordable and mid-priced garments, is price shock for consumers and may lead to [lower sales] volumes for the labour-intensive sector that employees millions,” he said in a release

The steep 13 percentage-point additional tax burden on consumers will influence buying decisions in the mid and upper-mid income segments, thus impacting the textile industry, Mr. Prakash said. India’s readymade garments market is estimated around $103.5 billion (2024) and expected to grow – making the domestic sales economically significant.

Volume reduction in domestic sales would translate quickly into lower capacity utilisation, layoffs and drop in income for millions of seamstresses, machinists and allied workers.

Source: The Hindu