GST Hike May Devastate India’s Garment Industry: CMAI

06 September 2025: Despite repeated assurances from various stakeholders, reports suggest that garments priced above Rs.2,500 may soon be taxed at 18%, up from the current 12% GST slab. Industry stakeholders have warned that this move could spell a death-knell for an industry already battling the impact of American tariff wars.

If GST Council proceeds with keeping Rs.2,500 as the cut-off for the 5% slab and imposes 18% GST on products above this threshold, it will be a severe blow to the aspiring middle class and organized garment manufacturers, who are already the worst hit by tariff pressures.

These manufacturers produce garments that are expensive not due to luxury consumption but because of the high cost of raw materials and intricate handwork involved.

Specific Concerns Raised:

Woolen Garments: Almost the entire range of woolen clothing – essential for middle-class consumers in North, North-East, and East India—falls in the Rs.3,500-7,000 price range. Placing these under the 18% slab would effectively force middle-class Indians to forego woolens in harsh winters.

Wedding Attire: Wedding garments, which even at the most basic level cost between Rs.10,000-15,000, would become significantly costlier, leaving parents compelled to settle for inferior outfits for their children’s weddings.

Traditional & Artisan-Made Clothing: Handmade and artisan-crafted garments are naturally expensive due to the time and skill required. Taxing them at 18% would damage India’s traditional craft ecosystem and severely impact artisan livelihoods.

Government and industry associations have invested considerable effort to move this traditionally informal sector into the formal economy. This GST hike risks undoing years of progress and pushing the sector back into informality.

The apparel industry, which is already facing unprecedented challenges due to global tariff wars, needs a strong and resilient domestic market to survive. A drastic price hike in large product categories could cripple the sector entirely.

CMAI’s Appeal:
The Clothing Manufacturers Association of India (CMAI) has urged the Hon’ble Prime Minister to intervene and prevent such severe damage to the garment industry. CMAI emphasized that the apparel sector is the lifeline of India’s textile heritage and employs over 12 million Indians, most of whom are women and semi-skilled or unskilled workers.