The Confederation of Indian Textile Industry (CITI) has raised concerns over the proposed GST rate revisions on ready-made garments, warning of significant disruptions to the textile sector, employment, and the economy.
Under the proposal, garments priced up to Rs1,500 will retain a 5 per cent GST rate. However, those priced between Rs 1,500 and Rs10,000 will face an 18 per cent rate, while garments above Rs10,000 will attract a steep 28 per cent GST.
CITI fears the hike will push consumers and businesses toward informal markets, severely impacting the formal retail sector. The increase is also expected to exacerbate price inflation, disproportionately affecting price-sensitive consumers and slowing down demand, particularly for festive and celebratory garments.
Additionally, CITI flagged the ongoing issue of an inverted duty structure (IDS) in the man-made fibre (MMF) segment. Current GST disparities across the value chain block working capital and hinder growth. For example, while GST on MMF fibre is 18 per cent, yarn is taxed at 12 per cent, and fabrics at 5 per cent, creating financial strain for businesses.
To address this, CITI reiterated its recommendations to reduce GST on raw materials like PTA and MEG from 18 per cent to 12 per cent, which would resolve the IDS issue without hurting government revenues.
Chairman Rakesh Mehra emphasized the broader implications of the proposed hike: “Higher taxes will reduce consumption, disrupt the sector, and threaten livelihoods in SMEs involved in spinning, weaving, and manufacturing.”
CITI urged the government to reconsider the revisions, calling for policies that promote growth in India’s textile sector, which provides employment to millions and serves as a cornerstone of the economy.
