Fix 5% GST on Readymade Garments & Made-ups Irrespective of Cost: Prakash Ammanabolu, Telangana State Federation of Textile Associations
Hyderabad, September 25, 2025: The 56th GST Council has recently revised the GST structure for readymade garments, placing items priced up to ₹2,500 under the 5% GST slab, while levying 18% GST on garments priced above ₹2,500. This abrupt jump in tax rate creates a sharp discontinuity, which:
Imposes a significant price shock on consumers. The risks include a reduction in sales volumes within a highly labour-intensive industry. It may adversely impact domestic demand, exports, and the ongoing recovery of the textile sector.
In light of these concerns, Mr Prakash Ammanabolu, President of the Telangana State Federation of Textile Associations, has urged the GST Council to standardise GST at 5% across all price points for readymade garments and made-up textiles.
Why This Matters
The textile and apparel sector contributes approximately 2.3% to India’s GDP, represents around 13% of India’s industrial and rural workforce, and directly employs over 45 million people, including a large number of women and rural workers.
India’s readymade garments market, valued at USD 103.5 billion in 2024, continues to grow, reflecting its significance in the domestic economy.
Impact of the Tax Hike
The move from 5% to 18% GST above the ₹2,500 threshold imposes an additional 13% tax burden on consumers, disproportionately affecting the mid-priced and upper-mid segments.
This could deter purchases in this price range, reduce production volumes, and directly impact employment and incomes, especially in informal and small manufacturing units. Even minor volume declines in such a high-employment sector can lead to outsized socio-economic consequences, including layoffs and reduced household incomes.
Proposal
The Federation strongly recommends that the GST Council: Amend the current GST structure so that all readymade garments and made-ups, irrespective of price, attract a uniform 5% GST.
Justification
Removes the steep tax cliff between affordable and mid-range garments. Aligns taxation with the broader policy goal of taxing luxury while supporting mass-market and essential goods and services.
Preserves domestic demand and employment in a sector that supports tens of millions of livelihoods. Adjusts the tax framework to current inflationary conditions and real price dynamics.
With the textile sector playing a pivotal role in the country’s GDP and supporting over 45 million direct jobs, the Federation respectfully urges the GST Council to reconsider its recent decision and provide relief through a uniform 5% GST on all readymade garments and made-up textile products, regardless of price.
