Key remarks from Ms. Chandrima Chatterjee, Secretary General, CITI, regarding the Confederation of Indian Textile Industry's (CITI) concerns over the proposed GST rate hike on ready-made garments.
GST Challenges in the MMF Sector
CITI has also flagged the persistent issue of an inverted duty structure (IDS) in the man-made fibre (MMF) segment, where varying GST rates across the value chain block working capital and stifle growth.
Segment Cotton MMF
Fibre 5% MMF 18%
Yarn 5% MMF 12%
Fabrics (woven, knitted) 5% MMF 5%
Garments* 5% or 12% MMF 5% or 12%
Home Textiles & Made-ups* 5% or 12% MMF 5% or 12%.
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The GST rate is 5% if the product value is <₹1,000; otherwise, it is charged at 12%.
CITI reiterated its previous recommendations to reduce GST rates on raw materials such as PTA and
MEG from 18% to 12%, which would ease the IDS issue in the MMF sector without impacting government revenues. CITI fears that the proposed hike will disrupt the formal retail sector, driving consumers and businesses toward informal and unregulated channels.
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Employment Losses and Sectoral Impact
The textile industry, already facing economic strain, stands to lose several jobs, particularly in small
and medium enterprises (SMEs) involved in spinning, weaving, and garment manufacturing.
The proposed GST hike is expected to heighten price inflation, disproportionately affecting price-sensitive consumers. CITI has urged the government to reconsider the proposed GST rate hike and adopt a balanced approach that fosters growth in the textile sector while ensuring consumer affordability.
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"Higher taxes on garments tied to celebrations and festivals will slow down consumption at a time when demand is already under pressure. This could have a ripple effect on the economy, and the textile sector is a cornerstone of India’s economy, providing livelihoods to millions. Policies must nurture its growth rather than create hurdles," said Rakesh Mehra, Chairman, CITI.