KCC&I calls for immediate action on proposed GST hike for textiles, handicrafts

According to the proposal, textiles priced between Rs 1,500 and Rs 10,000 would be taxed at 18 per cent, while textiles exceeding Rs 10,000 would fall under the highest GST slab of 28 per cent.

The Kashmir Chamber of Commerce and Industry (KCC&I) made an urgent appeal to Prime Minister Narendra Modi, Chief Minister Omar Abdullah, and Lieutenant Governor Manoj Sinha, expressing concern about the potentially devastating effects of the proposed GST slab hike on textile and handicraft products.

In a statement, the Chamber revealed that the Group of Ministers (GoM), chaired by Bihar’s Deputy Chief Minister Samrat Chaudhary, had recommended a significant GST rate increase during their meeting on December 2, 2024. According to the proposal, textiles priced between Rs 1,500 and Rs 10,000 would be taxed at 18 per cent, while textiles exceeding Rs 10,000 would fall under the highest GST slab of 28 per cent. This proposal is scheduled for discussion at the 55th GST Council meeting on December 21, 2024, in Jaisalmer.

The KCC&I expressed that the implications of the proposed hike are deeply troubling, especially for the economy of Jammu and Kashmir, where textiles and handicrafts play a critical role. The sector provides direct and indirect employment to over 2.5 lakh artisans, many of whom are women and individuals from marginalised communities. The Chamber emphasised that handicraft products, which are highly labour-intensive, depend on affordable production costs, as over 75 per cent of their value comes from wages. The proposed GST increase could severely disrupt this balance, leading to catastrophic consequences for the region’s economy.

The KCC&I further explained that applying a 28 per cent GST to products supplied from a Kashmir manufacturing unit to a showroom in Delhi would create a heavy financial burden. Dealers would be forced to absorb the tax expense without guaranteed sales, potentially leaving products unsold for months or even years. This situation would erode the capital of small and medium enterprises, threatening their financial stability and survival.

Regarding employment, the Chamber stated that the rise in product prices due to the GST increase would make goods unaffordable for both domestic and international consumers, resulting in drastically reduced demand and mass unemployment among artisans, many of whom are women.

The statement also highlighted the global renown of Jammu and Kashmir’s handicrafts for their intricate craftsmanship and cultural significance. However, the proposed GST hike could harm this heritage by discouraging artisans from continuing their craft. The resulting economic ripple effect would disrupt the entire value chain, including suppliers, traders, exporters, and allied service providers, ultimately affecting the local economy.

In a previous communication, the Chief Secretary of Jammu and Kashmir had recommended reducing the GST slab for handicrafts from 12 per cent to 5 per cent to promote the sector and ease financial burdens on artisans and traders. The KCC&I argued that the current proposal to raise the GST rate to 28 per cent directly contradicts these efforts and would severely undermine the sector’s growth potential.

Given these concerns, the KCC&I called for immediate intervention to prevent the policy change and urged the reduction of the GST rate to 5 per cent, taking into account the unique challenges faced by Jammu and Kashmir’s economy. The Chamber also emphasised the importance of considering the voices of local stakeholders at the national level.