18 per cent GST on garments leaves textile industry, consumers worried

As the wedding season draws near, lovers of ready-to-wear traditional Indian attire are bracing for a financial pinch. The recent decision to hike GST from 12 per cent to 18 per cent on garments priced above Rs 2,500 has stirred discontent across the textile industry and among consumers.

An increase from 12 per cent to 18 per cent will also increase the retail price of commonly and essentially used garments, thereby reducing affordability for middle-class consumers.

For those who cherish rich embroidery, handloom fabrics and festive wear, Rs 2,500 is hardly extravagant — especially when artisan-crafted lehengas, sarees and sherwanis often start well above that range.

“The move feels like a penalty on culture,” said a Ludhiana-based retailer, Kanwaldeep Singh, and President of the Punjab Textile Merchants Association.

“Hand embroidery isn’t just decoration but livelihood for thousands of artisans. And now, it’s being taxed like a luxury”? he questions.

The Ludhiana-based industry, already reeling under the deluge of cheap Chinese and Bangladesh winter clothing, will face one more mountain to overcome in their struggle to survive.

The common domestic manufacturers are facing tough competition from cheap imports from China, Vietnam, etc. Domestic production is costlier due to better quality and higher rental, electric and labour charges. Higher rate of GST slab of 18 per cent will directly impact adversely as cheap imported goods affect domestic products, adds another garment retailer, Vishal Kapoor.

The average price of woolen clothing, which are essential in North India, North East and East India, and ethnic wear are priced above Rs 2,500.

“Nowhere would a good quality sweater or Jacket, worn as much by the middle class as well as the affluent class, be available for below Rs 2,500, other than second-hand clothing or surreptitiously smuggled imported clothes. All these essential woolen garments will now be hugely costlier to average middle class citizens,” said a woollen garment manufacturer.

The textile and apparel sector, country’s second-largest employer after agriculture, supports over 45 million people directly and nearly 100 million indirectly — many of them women and rural artisans. The GST hike, though aimed at streamlining taxation, is having unintended consequences. Small businesses and MSMEs are feeling the heat, with fears that the added cost will push buyers towards unorganised sellers, who avoid billing and compliance.

Industry bodies such as the Clothing Manufacturers Association of India (CMAI) have urged the government to reconsider the decision. “Garments above Rs 2,500 are not just for the elite,” said CMAI president Santosh Katariya.

“They represent our heritage — block printing, weaving and embroidery. Taxing them at 18 per cent risks eroding that legacy,” he added.

Families preparing for weddings are now facing emotional and financial strain.

“Dressing up your daughter for her big day should not be a burden,” said a parent from Ludhiana, adding “but with this tax, even modest outfits feel out of reach.”

Daman, who is set to tie the knot this November, expressed concern over the rising cost of formal wear. “You don’t get anything decent in that price range — Rs 2,500 barely covers daily wear,” she said.

“Formal and embroidered outfits are already expensive and now, the government has added an extra burden with 18 per cent GST,” she added.