Numerous Ahmedabad cloth markets hold one-day strike against upcoming GST rates

By

Isabelle Crossley

Published
Dec 30, 2021

On December 30, numerous cloth markets in Ahmedabad launched a one-day strike in protest against the government’s proposed goods and services tax hike for the sector. 

The clothing retail and wholesale stores shut to protest the Union Government’s plan to raise GST on numerous categories of apparel and textiles to 12% from January 1, 2022. Around 45,000 garment retail and wholesale shops pledged to down their shutters on Thursday to highlight how they feel the tax hike will negatively affect the industry, TNN reported. 
 
“Till 2017, the textile industry did not attract any taxes,” said Ahmedabad’s Maskati Cloth Merchants’ Association’s president Gaurang Bhagat, TNN reported. “Raising taxes at a time when traders are barely recovering from the after-effects of Covid is outrageous. This will not just increase our working capital needs but also dent demand in the longer run.”

From January 1, 2022, all clothing and textiles, as well as numerous raw materials, will be taxed at 12% GST to address what the government terms an inverted duty structure. The tax hike is expected to especially affect clothing in the value segment of the market because clothing priced below Rs 1,000 ($13.41) will now attract 12% GST whereas clothing priced above Rs 1,000 was already taxed at 12%. As retailers will need to increase their prices to account for the higher tax rate, consumers will also face higher prices which could harm demand. 
 
“The demand has already taken a hit and, in the longer run, this will further impact production which in turn will affect employment,” said Bhagat. “Textile is a labour-intensive industry and provides employment to a lot of people. This will all be affected with surge in tax rates.”