The Central Board of Indirect Taxes and Customs (CBIC) announced that the GST rate on garments, textiles, and footwear would be raised from 5% to 12%, with effect from January 1, 2022. The textile and handloom industries are already suffering from the effects of the Covid pandemic, and any proposal to raise the tax would be a death knell for the industry. All textiles and clothing will become more expensive due to the proposed GST hike in the textile sector.
The possible impacts of the GST hike could be:
• Loss of over 1.5 million jobs in primary and ancillary units due to the planned GST increase
• 85 % of the industry will become the victim, and roughly 80% of final products will have increased prices
• Cloth traders claimed trading activity has been hampered for the previous two years by the Covid-19 pandemic but is progressively improving due to a decrease in new illnesses in recent weeks. They had good hopes coming with the year 2022, but the same was shattered with the above announcement.
The industry clearly expresses dissatisfaction with higher GST rates on textiles and clothing:
• Apparel manufacturers seek a delay in the implementation of the GST increase on hosiery items
• The Hosiery Manufacturers’ Association has expressed concern that it will affect the common person and those in the micro, small, and medium enterprises
• According to the cloth traders, the current 5% GST levy on purchasers is Rs 1,500 crore, which will be increased to Rs 3,600 crore if the 5% GST is increased to 12%. They claimed that an additional burden of nearly Rs 2,100 crore would be imposed on people in New Year 2022 due to an increase in GST
• Over 60% of citizens and opposition party leaders criticized the GST increase on apparel, textiles, and footwear as “completely unjustifiable.”
