Apparel Industry Raises Alarm Over Proposed GST Increase
The apparel industry has voiced strong objections to the proposed Goods and Services Tax (GST) hike recommended by the Group of Ministers (GoM) on rate rationalization. Under the suggested framework, garments priced between ₹1,500 and ₹10,000 would attract an 18% GST rate, while those exceeding ₹10,000 would fall under the steepest GST bracket of 28%. Meanwhile, clothing priced at or below ₹1,500 would continue to be taxed at the existing 5%.
Industry leaders, including the Clothing Manufacturers Association of India (CMAI), have urged the government to reconsider the hike. They caution that such changes could significantly impact consumer demand, lead to large-scale unemployment, and disrupt the value chain within the textile and apparel sector.
Calls for Policy Review
CMAI emphasized the importance of policies that nurture stability and growth in the sector. It advocated for a balanced approach, highlighting that the proposed hike could have far-reaching consequences. The association warned that the move might push consumers and businesses toward informal channels, thereby undermining formal retail operations and aiding unregulated sellers. This could further destabilize the industry, which is already grappling with challenges such as declining demand and reduced profitability.
According to CMAI, the changes could result in job losses exceeding one lakh, dealing a severe blow to an industry that is a major contributor to employment in India. “The GST hike could hurt small and medium enterprises (SMEs), which form the backbone of the industry, forcing many to shut down operations,” said a CMAI representative.
Advocating for Continuity
CMAI proposed maintaining the current GST structure, particularly the uniform 5% tax rate, as a practical alternative. The association argued that this approach would provide relief to both manufacturers and consumers, fostering growth while avoiding unnecessary disruptions.
CMAI President echoed these sentiments, highlighting the illogical disparity in taxation policies. “Taxing garments over ₹10,000 at 28% while applying an 18% tax rate to mobile phones priced up to ₹1.5 lakh raises serious questions about the rationale behind these changes,” the president remarked.
Potential Fallout
Industry insiders have expressed fears that the increased tax burden could erode already thin profit margins, intensify financial strain, and accelerate job losses in the sector. For an industry vital to the economy and employment generation, such disruptions could be catastrophic.
Stakeholders argue that while the government aims to rationalize tax rates, it must also consider the broader implications of its decisions on industries that support millions of livelihoods.
A Plea for Thoughtful Reform
The apparel industry has reiterated its plea for thoughtful reforms that strike a balance between revenue generation and sectoral sustainability. As discussions around the proposed GST changes continue, the industry hopes for policies that prioritize growth, job creation, and overall economic stability over short-term fiscal gains.
GST Collections Reach ₹1.82 Lakh Crore in November, Up 8.5% YoY
India’s gross Goods and Services Tax (GST) collections for November 2024 grew by 8.5% year-on-year (YoY) to ₹1.82 lakh crore, driven by robust domestic consumption. However, on a month-on-month (MoM) basis, the collections fell by approximately 2.7% compared to October’s ₹1.87 lakh crore.
Government officials attributed the MoM decline to typical seasonal trends observed each year. “Similar patterns were evident in 2023 when collections dropped from ₹1.72 lakh crore in October to ₹1.68 lakh crore in November. Historically, April sees the sharpest rise, while May records the most significant dip in collections,” they noted.
The November figures reflect economic activity during October, a month marked by heightened festive spending due to celebrations like Dussehra and Diwali. These festivals traditionally boost consumption and contribute to increased tax collections.
Detailed Revenue Breakdown
According to data from the Ministry of Finance, the November GST collection was distributed as follows:
- Central GST (CGST): ₹34,141 crore
- State GST (SGST): ₹43,047 crore
- Integrated GST (IGST): ₹91,828 crore
- Cess: ₹13,253 crore
This performance builds on October’s collection, which hit ₹1.87 lakh crore — the second-highest monthly collection ever recorded — growing by 9% YoY. The all-time high GST revenue of ₹2.10 lakh crore was achieved in April 2024.
Domestic vs. Import Revenue
Domestic GST revenues showed robust growth, rising by 9.4% YoY to ₹1.40 lakh crore in November. Revenues from taxes on imports also increased, registering a 6% YoY growth to ₹42,591 crore.
Refunds issued during November totaled ₹19,259 crore, which marked an 8.9% decline compared to the same period last year. After adjusting for these refunds, the net GST collection for the month reached ₹1.63 lakh crore, representing an 11% growth YoY.
A Broader Perspective
November’s GST numbers reflect the sustained momentum in domestic consumption despite a slight seasonal dip. The festive period continues to play a significant role in bolstering economic activity and tax revenues. With collections consistently exceeding ₹1.80 lakh crore for several months, the GST framework remains a critical pillar of India’s revenue system.
As policymakers monitor these trends, the focus remains on ensuring sustained compliance and exploring measures to optimize tax administration further. This month’s data reinforces the resilience of the Indian economy amid evolving consumption patterns and seasonal fluctuations.
