In a critical move to safeguard India’s vital textile sector, the Telangana State Federation of Textile Associations has issued an urgent appeal to the GST Council. They are calling for a uniform 5% Goods and Services Tax (GST) rate on all readymade garments and made-ups, regardless of their price point.
This plea comes in response to the Council’s decision to impose an 18% GST on garments exceeding ₹2,500. Federation President Ammanabolu Prakash emphasized the severe implications of this higher tax bracket, advocating for a simplified 5% levy across the board.
Mr. Prakash highlighted the profound economic significance of the textile and apparel industry. It contributes approximately 2.3% to India’s GDP, forms about 13% of the nation’s industrial output, and is a major employer, providing direct jobs to over 45 million people. A substantial portion of this workforce comprises women and rural laborers, underscoring the sector’s crucial social impact.
The Federation argues that the current 18% tax on more expensive garments creates an “abrupt tax divide” between budget-friendly and mid-to-high priced apparel. This disparity is anticipated to hit consumers with a “price shock,” inevitably leading to decreased sales volumes in a sector known for its labor-intensive nature and vast employment.
The significant 13 percentage-point increase in tax burden on consumers is expected to directly influence purchasing decisions, particularly within the mid and upper-mid income brackets. This shift in consumer spending could have a detrimental effect on the entire textile industry. With India’s readymade garments market projected to reach around $103.5 billion in 2024, the health of domestic sales is economically paramount.
Should domestic sales decline, the repercussions would be swift and severe: reduced capacity utilization, widespread layoffs, and a significant drop in income for millions of skilled workers, including seamstresses and machinists, who depend on this industry for their livelihoods.