Trade

One Industry, One Voice: Garment Trade Associations Rally Against Proposed GST Rate Revisions

One Industry, One Voice: Garment Trade Associations Rally Against Proposed GST Rate Revisions

In a groundbreaking move to safeguard the domestic garment sector, the Clothing Manufacturers Association of India (CMAI) united with 14 prominent Garment Trade Associations from across the country to form a “Group of Associations” under the banner ONE INDUSTRY, ONE VOICE. The collective passed a unanimous resolution urging the Group of Ministers (GoM) to abandon a proposal to revise GST rates for garments and to retain the current structure of 5% and 12%.

This marks a historic moment, as such a large coalition of associations came together to address shared concerns, chart long-term growth strategies, and advocate for industry-wide policy reforms.

Key Resolutions and Recommendations

  1. Opposition to GST Rate Revision
    The associations raised strong objections to the proposed GST rate modifications, citing severe repercussions, including disruptions in manufacturing, pricing, and consumer demand. Such changes could drive businesses toward informal channels, jeopardizing industry growth, affordability, and employment stability. The group emphasized that increased prices would burden consumers, particularly during festive and wedding seasons, curbing demand.
  2. Introduction of a Tailored PLI Scheme
    The associations called for a Production Linked Incentive (PLI) scheme customized for the garment sector. The current PLI structure is more suited to the textile industry, requiring higher investment levels that small and medium garment manufacturers cannot meet. A sector-specific scheme would align with the unique characteristics of the garment industry, encouraging broader participation and growth.
  3. Securing MSMEs in Insolvency Proceedings
    The coalition proposed policy changes to ensure MSMEs are treated as secured creditors in insolvency and bankruptcy proceedings against large corporations. Presently, most recoverable funds go to banks and other secured creditors, leaving MSMEs with minimal compensation. Equal prioritization would safeguard their financial interests, bolster confidence in large-scale partnerships, and promote higher trade volumes.
  4. Revising Section 43B(h) of the Income Tax Act
    Amendments to Section 43B(h) are reportedly disadvantaging smaller manufacturers, as large buyers increasingly prefer larger manufacturers. The associations proposed either eliminating this provision, extending it to the medium segment, or introducing a phased reduction in payment terms over three years. These changes would ensure equal opportunities for all MSMEs, particularly micro and small enterprises.
  5. Interest Subsidy for the Domestic Garment Sector
    The group advocated for an interest subsidy for the domestic garment sector, akin to the support provided to exporters. While the domestic sector has shown remarkable growth without incentives, targeted assistance would further enhance its potential.

Industry Leaders Speak

Santosh Katariya, President of CMAI, highlighted the importance of the collaboration, stating, “We are glad that all leading associations have united to address these concerns and amplify the industry’s voice. CMAI is committed to presenting comprehensive recommendations to the Government to ensure long-term growth and sustainability in the apparel sector.”

Rahul Mehta, Chief Mentor of CMAI, emphasized the urgency of timely policy interventions, noting, “The apparel industry requires policies that balance immediate stability with long-term growth. A supportive framework will unlock the sector’s potential and translate positive consumer trends into tangible growth.”

A United Front Across India

The meeting saw participation from leading trade associations, including:

  • Garment Exporters Association of Rajasthan (GEAR), Jaipur
  • Bangalore Apparel Manufacturers Association (BAMA), Bengaluru
  • Tirupur Exporters Association (TEA), Tirupur
  • Knitwear & Apparel Manufacturers Association of Ludhiana (KAMAL), Ludhiana
  • Gujarat Garment Manufacturing Association (GGMA), Ahmedabad
  • Sholapur Garment Manufacturers Association (SGMA), Maharashtra
    …and several others representing key garment hubs across the country.

The Role of the Apparel Sector in India’s Economy

With a retail market size of INR 5.4 lakh crore, the apparel industry is a vital pillar of the Indian economy, employing approximately 39 million people, including 16 million in domestic production. Despite its resilience and growth, the sector holds untapped potential for further expansion.

By implementing the proposed recommendations, the government can nurture this cornerstone industry, ensuring it continues to thrive and contribute significantly to India’s economy and employment landscape.

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