Garment Trade Associations across India urge GoM to drop the proposed GST rate changes

The main aim of the meeting was to foster a united, collective approach to secure long-term growth.

In a unique initiative towards strengthening the domestic garment sector, Clothing Manufacturers Association of India (CMAI) and 14 leading Garment Trade Associations from across India collectively met as a Group of Associationsand under ONE INDUSTRY, ONE VOICE passed a unanimous resolution for submission to Group of Ministers (GoM) to abandon a proposal to modify GST rates in the Garment Sector, and retain the existing structure of 5 per cent and 12 per cent.

It is perhaps the first time that so many large associations from across the country got together to discuss common issues and programs, as also to submit a common representation to the Government.

The main aim of the meeting was to foster a united, collective approach to secure long-term growth. Other key decisions encompassed vital budget recommendations to boost the apparel trade, drive sustainable growth and address critical industry needs. The five key recommendations are stated as below:

• Abandon the proposed GST rate revision: All the leading Garment Associations across India have already raised serious consequences which includes large scale disruption affecting manufacturing, pricing, and consumer demand and pushing businesses toward informal channels if any GST rate revision is endorsed by the Group of Ministers (GoM). The Group of Associations have cautioned to immediately drop any such plans, emphasizing that any such revision will deeply harm industry growth, affordability and employment stability as it will lead to inflated prices, burdening price-sensitive consumers and slowing demand, especially for festive and wedding- related apparel.

• Tailored PLI scheme for garment sector: Introduction of a distinct Production Linked Incentive (PLI) scheme specifically for the Garment sector was collectively deliberated as the current PLI structure demands significant investment levels more suited for the textile industry and does not align with the operational scale and investment capacity of Garment manufacturers. A tailored PLI scheme for the Garment sector will better reflect the industry’s unique characteristics and investment patterns, thus encouraging greater industry participation and benefits.
• Secure MSME’s in insolvency proceedings: The Government must formulate a policy to ensure that MSME’s are treated as secured creditors during insolvency and bankruptcy proceedings against large Corporates. Currently, most recoverable funds are allocated to secured creditors like Banks leaving MSME’s with minimal or no Compensation. Equal priority will protect their financial exposure, boost confidence in

• supplying to large Corporations, and ultimately contribute to higher trade volumes and tax collections.
• Rectifying Section 43B(h) for equal opportunity amongst MSMEs: The changes to Section 43B(h) of the Income Tax Act is hurting smaller manufacturers rather than helping them as large buyers are preferring to purchase from bigger manufacturers. The distinction between Micro, Small, and Medium segments within MSME’s is creating a huge disadvantage to the Micro and Small segments. Therefore, it is recommended to either:
  • eliminate this provision or
  • extend the rule to the Medium Segment, ensuring equal growth opportunities, or
  • introduce a gradual reduction of the payment period: 90 days in Y1, 60 days in Y2, and 45 days in Y3.
• Interest subsidy for the domestic garment sector: It is urged to introduce an interest subsidy for the Domestic Garment sector, similar to the support being provided to the Export sector. The Domestic Garment industry does not require heavy capital investment, but it does need assistance with interest costs. While MSME support is essential, they deserve special attention due to its unique challenges. Despite the lack of incentives, the Domestic sector has shown significant growth and targeted assistance would further boost its potential.

Speaking after the meeting, Santosh Katariya, President, Clothing Manufacturers Association of India (CMAI) stated, “We are glad that all the leading associations have come together under Group of Associations to address these concerns and create a unified voice for the industry. As CMAI, we are committed to presenting comprehensive recommendations to the Government on critical matters such as GST, Supply Chain Disruptions, Rising Input Costs and the need for Policy reforms. These are essential to ensure long-term growth and sustainability of the Apparel sector.”

Rahul Mehta, Chief Mentor, Clothing Manufacturers Association of India (CMAI) expressed, “While we are seeing shift in consumer sentiments, it is crucial to recognize that without timely policy interventions, the sector will continue to face challenges. The Apparel industry requires policies that nurture its growth and ensure a balanced approach that fosters both immediate stability and long-term sustainability. A supportive policy framework will be vital in unlocking the sector’s full potential and translating positive consumer trends into tangible, sustainable growth for the industry.”

Other leading Garment & Textile Trade Associations from across India who participated included Garment Exporters Association of Rajasthan (GEAR) – Jaipur; Bangalore Apparel Manufacturers Association (BAMA) – Bengaluru; South India Garment Association (SIGA) – Bengaluru; Karnataka Hosiery & Garment Association (KHAGA); Karnataka Innerwear Association (KIA) – Bengaluru; Knitwear & Apparel Manufacturers Association of Ludhiana (KAMAL) – Ludhiana; Woolen Garment Manufacturers Association – Ludhiana; Tirupur Exporters Association (TEA) – Tirupur; Federation of Surat Textile Traders Association (FOSTTA) – Surat; GVS – Surat; Indore Readymade Vastra Vyapari Sangh (IRVVS) – Madhya Pradesh; Gujarat Garment Manufacturing Association (GGMA) – Ahmedabad; Sholapur

Garment Manufacturers Association (SGMA) – Maharashtra; Noida Apparel Exporters Cluster (NAEC) – Noida, UP and others.

The apparel industry, with a robust retail market size of Rs 5.4 trillion, stands as a cornerstone of the Indian economy. Beyond its economic significance, the sector is a major employment driver, providing livelihoods to approximately 39 million people, including 16 million blue-collar jobs in domestic production. While the industry has demonstrated impressive growth and resilience, there is immense potential for even greater success. By implementing targeted support and initiatives, the sector can unlock new opportunities for sustainable growth and long-term stability.