The Clothing Manufacturers Association of India (CMAI) has sounded a strong warning against the government’s reported plan to hike Goods and Services Tax (GST) on garments priced above ₹2,500 from 12% to 18%, saying the move will deal a “death-knell” to an industry already battered by global tariff wars and weak domestic demand.
The body has also urged Prime Minister Narendra Modi to intervene and ensure that “drastic damage” is not inflicted on the sector, which employs over 12 million people.
CMAI flagged several challenges the higher levy would trigger, ranging from steeper costs for middle-class consumers to erosion of traditional handloom and artisan-based clothing, as well as a potential pushback of the sector into informality.
The association, which represents over 5,000 apparel manufacturers, exporters, brands and retailers across India, said the ₹2,500 cut-off is arbitrary and disproportionately hurts middle-class families and organized garment producers.
“Almost the entire range of woolen garments – essential for the middle class across North, North-East and East India – are priced between ₹3,500 and ₹7,000. Placing them in the 18% GST slab is equivalent to asking middle-class Indians not to wear woolens during the bitterly cold winters,” CMAI said in its appeal.
The association also cautioned that wedding apparel and traditional handmade clothing would become unaffordable. “It is the dream of every parent to dress their child in the best possible wedding clothes. But even budget wedding attire costs ₹10,000–15,000. Higher GST will force parents to compromise on their child’s big day,” it noted.
On artisan-led clothing, CMAI said the higher rate would “kill traditional craft and hit the artisan community hard” as handmade pieces, by their very nature, are priced above the proposed threshold.
Employment Concerns
Beyond consumer affordability, CMAI stressed the implications for livelihoods. India’s garment industry directly employs over 12 million people, largely women and semi-skilled or unskilled workers. A steep GST hike on large product categories, the body argued, would choke domestic demand at a time when exporters are already grappling with the fallout of American tariff actions.
“The need of the hour is a strong and vibrant domestic sector to absorb the shock of global disruptions. If the domestic market is also hit by such an unprecedented price increase, it will spell the death-knell for the industry,” CMAI stated.
Fear of Informalisation
The government has in recent years pushed the apparel industry to shift from the informal to the formal sector. However, CMAI warned that higher taxation could undo these gains, forcing manufacturers back into unorganised channels to survive. “This move will negate all efforts and take the industry back to the informal sector,” the body cautioned.
Source from: https://www.cnbctv18.com/economy/gst-rate-hike-could-cripple-indias-garment-industry-warns-cmai-19663429.htm
