The Clothing Manufacturers Association of India (CMAI) has raised concerns over the rate-rationalisation proposal put forward by the Group of Ministers (GoM) that includes significant changes to GST rates for the apparel sector.
As per the new recommendations, ready-made garments priced up to Rs 1,500 will retain the 5% GST rate, but those priced between Rs 1,500 and Rs 10,000 will see a significant increase to 18%. Garments above Rs 10,000 are proposed to fall under the highest GST bracket of 28%.
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The CMAI expressed deep concern over the potential adverse effects of these changes on the apparel industry, particularly the impacts on manufacturing, pricing, and consumer demand. “The proposed GST rate hike risks severely disrupting the formal retail sector by driving both consumers and businesses toward informal channels. This shift would adversely affect legitimate retailers and potentially benefit unscrupulous sellers and illegal merchants,” the CMAI said in a statement.
It further said that the textile industry, already under pressure, may lose up to 100,000 jobs with small and medium-sized enterprises (SMEs) in spinning, weaving, and garment manufacturing — operating on thin profit margins — facing income losses and squeezed profitability.
“Such a hike would lead to more price inflation, compounding challenges for price-sensitive consumers, especially women. Higher taxes on products related to celebrations and festivals will further slowdown consumption, which is already on the decline, creating a potential setback for the economy,” the CMAI said.
The CMAI said in light of these concerns, it urges the government to discard the proposed GST rate revisions. While the intent to streamline the tax structure is recognised, policy changes must only strengthen the apparel industry’s growth and stability.