Textile Body Raises Concerns Over Proposed GST Hike On Ready-Made Garments

Textile industry body Confederation of Indian Textile Industry on Thursday raised concerns over the proposed upward revision of goods and services tax levy on ready-made garments, warning of potential far-reaching impact on the industry, employment, and the overall economy.

CITI also urged the government to reconsider the proposed hike in goods and services tax rate and adopt a balanced approach that fosters growth in the textile sector while ensuring consumer affordability.

"Under the proposed framework, garments priced up to Rs 1,500 will continue to attract a 5% GST rate.However, garments priced between Rs 1,500 and Rs 10,000 will face a steep increase to 18%, and those priced above Rs 10,000 will fall under the highest tax slab of 28%," CITI said.

CITI has also flagged the persistent issue of an inverted duty structure in the man-made fibre segment, where varying GST rates across the value chain block working capital and stifle growth.

The proposed GST hike is expected to heighten price inflation, disproportionately affecting price sensitive consumers, it argued.

"Higher taxes on garments tied to celebrations and festivals will slow down consumption at a time when demand is already under pressure. This could have a ripple effect on the economy, and the textile sector is a cornerstone of India's economy, providing livelihoods to millions. Policies must nurture its growth rather than create hurdles," said Rakesh Mehra, Chairman, CITI.

CITI fears that the proposed hike will disrupt the formal retail sector, driving consumers and businesses toward informal and unregulated channels.