Apparel manufacturers urge government to reconsider proposed GST hike on clothing

By

Isabelle Crossley

Published
Sep 30, 2021

Apparel manufacturing businesses have urged the central government and Goods and Services Tax Council to reconsider and decide against introducing a proposed GST rate hike for clothing.

The government had announced that it has proposed an increase in GST rates on apparels and garments priced over Rs 1,000 ($13.47) from the current rate of 5% to 12%. The increase would be effective from January, 2022, ET Bureau reported. 
 
In a bid to urge the government to keep the current GST rates on garments as they are, the Gujarat Garments Manufacturers’ Association made a representation to Prime Minister Narendra Modi to reconsider. The GGMA stated that the Indian garment industry is still recovering from the economic effects of the coronavirus pandemic and stated that any increase in taxes would derail this recovery.

“Most industrial units continue to operate at 65% of the pre-Covid levels,” said the GGMA in its representation, TNN reported. “Moreover, raw material prices have shown a steep rise. Already post-pandemic, at least 15% of garment manufacturing units have permanently shut down or else have scaled down operations.”
 
The GGMA also stated that any GST rate hike would harm the competitiveness of Indian garment businesses on the international market. Indian businesses compete with their counterparts from countries including Vietnam and Bangladesh for international orders.

Garment export businesses have raised concerns on numerous occasions that businesses in other countries enjoy more favourable tax rates from their respective governments which gives them a competitive edge over Indian businesses.