The Clothing Manufacturers Association of India (CMAI) has warned against a potential increase in the Goods and Services Tax (GST) for higher-priced garments. According to recent reports, the GST on clothing items priced above Rs 2,500 is likely to be raised from 12 per cent to 18 per cent. CMAI opines, this move would harm the industry that is already facing challenges from recently imposed American tariffs.

CMAI states, if the GST Council sets Rs 2,500 as the threshold for the 5 per cent tax bracket and raises the rate to 18 per cent for more expensive products, it would negatively impact the growing middle class and the organized garment manufacturing sector. The association argues, 0 many products are priced higher due to the cost of raw materials and artistic handwork. Placing them in a higher tax bracket would hurt both manufacturers and consumers.

For example, essential woolen garments in North, North-East, and East India typically range from Rs 3,500 to Rs 7,000. Taxing these items at 18 per cent would make them less affordable for the middle class, CMAI points out. Similarly, wedding garments, often costing Rs 10,000 – Rs 15,000 or more, and artisan-made clothing, which is already expensive due to labor-intensive processes, would face significant price increases under the proposed tax.

The association warns, the tax hike could force parts of the industry back into the informal sector, reversing years of progress toward formalizing garment manufacturing. They emphasize, with the sector already grappling with the fallout from the US tariff war, strong domestic demand is crucial for sustaining growth and protecting livelihoods.

The association has appealed to the Prime Minister to intervene, highlighting that the garment industry is India’s second-largest employer, providing jobs to over 12 million people, many of whom are women and semi-skilled or unskilled workers.