Rahul Mehta, Chief Mentor, Clothing Manufacturers Association of India (CMAI), has hailed the government's objective to simplify the GST structure by reducing the number of tax slabs and to make essential consumer products, like clothing, more affordable. This goal aligns perfectly with the interests of the apparel industry, he notes.

However, currently, garments are taxed at 5 per cent for those priced up to Rs 1,000 and at 12 per cent for those above that threshold, Mehta points out. If the 12 per cent slab is eliminated, garments in that category might be pushed into a new, higher 18 per cent slab, which would be ‘disastrous,’ he warns.

To avoid this outcome and truly benefit the industry, Mehta advocates for a single, uniform 5 per cent GST rate across the entire textile value chain. He argues, this is a solution the apparel industry has been seeking since the GST's inception. A uniform rate would not only make clothing more affordable for consumers but also resolve the long-standing issue of the inverted duty structure.

Mehta further warns, increasing the Rs 1,000 price threshold pushes garments above the new limit into a much higher 18 per cent slab. The significant gap between a 5 per cent and 18 per cent rate would encourage manufacturers to compromise on product quality to fall into the lower tax bracket, he says. It could also lead to unethical practices like under-invoicing and the growth of an unregulated ‘grey market,’ as businesses may seek to avoid the high tax rate, he adds.

In conclusion, while the intentions behind the GST reforms are ‘commendable’ and ‘long overdue,’ Mehta emphasizes, the government must be meticulous in its implementation to avoid unintended, harmful consequences for the apparel industry.