Apparel Manufacturers Disappointed by Hike in GST Rates on Clothing

NEW DELHI: The Garment Manufacturers Association of India or CMAI on Friday expressed “deep disappointment” at the Center’s notification of the Goods and Services Tax (GST) rate hike on clothing, effective January 2022.

The Central Council of Indirect Taxes and Customs (CBIC) on Thursday notified an increase in the rate of the GST to 12%, against 5% on fabrics and clothing from January 2022. In addition, the GST on clothing from any value has been increased to 12%. Previously, GST was 5% on the sale value until ??1000 per piece.

The changes made will increase the prices of all fabrics and clothing, the industry body said in a statement. The hike was based on recommendations from the GST Council, according to media reports.

“CMAI, as well as trade associations and bodies across India have vigorously called on the government and the GST Council not to implement this change, and it is indeed extremely disappointing that the Council has chosen not to implement this change. ignore their call, ”Rajesh Masand, chairman, CMAI said in the statement.

The impact of this cost increase will be pronounced as the industry faces inflationary headwinds, with prices for raw materials, especially yarn, packaging materials and freight on the rise.

The market is expected to see an increase in clothing prices of 15 to 20 percent over the next season, even without the increase in the GST rate, the industry body said.

Over 80% of the Indian clothing market consists of clothing priced below ??1,000, he added.

“CMAI believes this measure is completely out of place, as it would be introduced primarily to address the reverse tariff structure existing in one section of the industry – and that sector makes up no more than 15% of the total industry. To solve a problem that exists in 15% of the industry, this decision will therefore have a negative impact on 85% of the total industry, ”Masand said.

CMAI will continue to dissuade the government as well as the GST Council from not making this rate change.

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