The Clothing Manufacturers Association of India today expressed its deep disappointment at the recent Notification amending the GST Rates on Apparel.
Rajesh Masand, President, stated “CMAI, along with Associations and Trade Bodies from all over India have been vigorously representing to the Government and GST Council not to implement this change, and it is indeed extremely disappointing that the Council has chosen not to heed their plea”.
The changes effected will increase the prices of all Fabrics and Garments priced below Rs.1,000 from 5% to 12%. In fact, with the proposed merger of the 12% and 18% slabs to a single 15% or 16% rate, it will result into a whopping increase of 300% in the GST rate for Garments which are used by the weaker sections of Society – those who buy clothes costing less than Rs.1,000! This is especially shocking when one considers that more than 80% of India’s total Garment market is below the Rs.1,000 price level.
The Textile Industry has traditionally had a significant portion operating in the Informal Sector, and CMAI has worked very hard over the last several years to get more and more players into the Formal Economy. This was greatly assisted by the reasonable rates under the current GST Structure. “We fear that this massive increase in GST Rates may persuade many players to switch to the informal sector once again” Masand added.
What will make the impact of this cost increase even more drastic, is the fact that the Industry is reeling under a totally unprecedented price increase of its Raw Materials, especially Yarn, Packing Material, and Freight. The market is likely to see a 15% to 20% price increase in Garments in the coming season even without the GST Rate increase.
Rajesh Masand further added “CMAI believes this measure is completely misplaced, as it is reportedly introduced primarily to address the Inverted Duty Structure existing in a section of the Industry – and this sector is not more than 15% of the total Industry! To resolve a problem which exists in 15% of the Industry therefore, this move will adversely impact 85% of the total Industry”.
CMAI will continue its efforts to persuade the Government and GST Council not to go ahead with this change of rate, and hopes that the Government will recognize the disastrous impact on the industry, market, and employment if this change were to be implemented.
