GST rate cut on footwear, apparel likely in relief from 50% US tariffs
The 50% US tariffs are likely to impact one-fourth of India's textile exports in the next six months, experts say.
The GST Council has recommended a rate cut on footwear and apparel, in what can be seen as relief to a sector marred by 50% US tariffs, PTI reported on Wednesday, citing people aware of the matter.
The Goods and Services Tax (GST) on footwear and apparel priced up to ₹2,500 will now be taxed at 5%, as against 12% earlier, the people said, requesting anonymity since the deliberations of the council are ongoing.
At present, footwear and apparel priced up to ₹1,000 are taxed at 5%. Beyond that, 12% GST is levied.
The two-day 56th GST Council meeting, chaired by Union Finance Minister Nirmala Sitharaman and attended by her state counterparts, is currently underway in New Delhi. Deliberations on GST rate cuts for up to 175 items will continue on Thursday.
This comes after PM Narendra Modi announced rationalisation of the slabs. There will no longer be the 12% and 28%, slabs, meaning only two of the earlier four slabs will remain: 5% for essentials and 18% for non-essentials. A 40% slab is likely to be introduced for “sin goods” such as tobacco and cars costing ₹50 lakh and above.
US tariff impact on India's textile sector
The 50% US tariffs are likely to impact one-fourth of India's textile exports in the next six months, according to experts, even as traders grapple with order cancellations in their biggest export market.
"We are looking at a hit of at least 20-25% for the next six months, if I am considering some amount of re-orientation to be done because, otherwise, the figure is 28% of exports—largely apparel and made-ups," said Chandrima Chatterjee, secretary general of Confederation of Indian Textile Industry.
India's textile exports to the US stood at nearly $11 billion in 2024, of which $4.4 billion were garments, according to Apparel Export Promotion Council of India as well as India Briefing. That's less than 10% of global apparel exports to the US in a year.
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With inputs from PTI.
