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GST to affect handloom prices

GST is expected to increase prices of handloom products by 7.7 per cent. One reason is weight of products in the clothing consumption basket are different due to fiber, make, quality etc. So, a shift of consumers away from handloom products is expected. GST is not revenue-neutral for handloom products. It will change the structure of production and market relations. The rise in cost of handloom products will make them less competitive in retail markets.

GST will increase prices of cotton textiles over synthetics. As a result, blending of synthetic fibers with cotton fibers will gain traction. There is likely to be a huge impact of GST on the fiber mix in the Indian textile industry.

GST is likely to depress natural fiber production and increase man-made fiber production. Organic cotton and organic fiber production supply chains would be stressed. There is no clarity on the classification of handloom products as on date under GST.

GST will impact business strategies of investors, master weavers, cooperatives, retailers and suppliers. Handloom market places, including exhibitions, will have to make necessary changes to handle the new requirements emerging due to GST. The handloom sector is the second largest rural employment provider next to agriculture.