CMAI warns against GST hike on garments, citing industry impact

The Clothing Manufacturers Association of India (CMAI) has issued a stern warning against a proposed government plan to increase the Goods and Services Tax (GST) on garments priced above Rs 2,500 from 12 percent to 18 percent.

CMAI argues that this measure would be a "death-knell" for the industry, which is already grappling with weak domestic demand and the effects of global tariff wars. The association has formally appealed to Prime Minister Narendra Modi, urging him to intervene and prevent "drastic damage" to a sector that employs over 12 million people, many of whom are women and semi-skilled workers.

CMAI highlights that the proposed tax hike would disproportionately affect middle-class consumers, who rely on affordable clothing, and would also impact the tradition of handloom and artisan-based clothing. According to the CMAI, the above measure would also "kill traditional craft and hit the artisan community hard," as handmade items are typically priced above the proposed threshold.

Beyond the impact on consumers, CMAI emphasises the potential for widespread job losses, arguing that the industry needs a strong domestic market to "absorb the shock of global disruptions". The association believes that hitting the domestic market with a significant price increase could be disastrous for the industry's survival. Furthermore, the industry body cautions that this tax hike could reverse the government’s recent efforts to formalise the apparel industry, potentially pushing manufacturers back into un-organized channels to stay afloat.