The Chamber of Industrial and Commercial Undertakings (CICU) says the decision to increase the goods and services tax (GST) on garments and textiles from five per cent to 12 per cent is ruinous and is seeking a rollback of the decision. It says the hike in GST rate will make it hard for the textile industry to survive and since it is already struggling for survival amid the pandemic this move will push it into a deeper crisis.

The hike is said to impact business at large as prices of woven and knitted fabrics, knitted garments, textile garments etc will increase. It is also expected to adversely impact exports as the sector will not be able to compete at the international market and will lead to rampant tax evasion. Rising prices of raw materials are already said to be taking a toll on the business. Since almost 90 per cent of fabric production in the country is in the unorganised sector, increasing the rate to 12 per cent for fabrics is expected to hit power loom and handloom weavers.

The manmade fiber sector would face a 12 per cent rate from fiber to garments, while the cotton sector would have a five per cent tax on cotton and yarn and 12 per cent for fabrics and garments.