The Clothing Manufacturers Association of India (CMAI), one of the largest and oldest
Association representing the interests of the Domestic Garment Industry, expressed its deep sense of disappointment and anguish at the recent announcements from the GST Council indicating that with a view to address the issue of Inverted Duty Structure in the Textile Industry, it has been decided to change the GST rates applicable on Fabrics and Garments with effect from 1 st January. Although no formal communication has been received, reports indicate that the current applicable rate of 5% on all Fabrics and Garments up to the price of Rs.1,000, will be increased to 12%.
It is indeed disturbing, that in order to correct an issue faced by a small section of the entire Industry, the Council is considering increasing the prices of nearly 85% of the final products to the Consumers.
The Domestic Garment Industry is still struggling to revive post the Covid pandemic –
with most of the industry still at 60 – 65% of pre-covid levels (Retail, which is the
lifeline of Apparel Manufacturing, was one of the first sectors to shut down and one
of the last to re-open). Most indicators point to end 2022 as the earliest that the
Industry can hope to achieve its pre-covid levels. CMAI STRONGLY BELIEVES THAT
THIS, OR EVEN JANUARY 2022, IS NOT THE RIGHT TIME TO INCREASE TAXES.
The massive price increase of Raw Materials such as Yarn, fabric, fuel, packaging
materials, transportation, etc. is already seeing a 15-20% price increase in the final
price of the product. The Consumer is already reeling with job losses, wage cuts, and
social and personal traumas. TO ADD ANOTHER 7% TAXES TO THE PRICE OF AN
ESSENTIAL ITEM OF CONSUMPTION SUCH AS GARMENTS IS UNCALLED FOR.