The textile and apparel industry can be broadly classified into two segments. Yarn and fibre and secondly processed fabrics, readymade garments and apparels. Being part of a largely unorganized sector, it has been one of the highest contributors to economy and employment.

The current incidence of excise duty is around 5 per cent (With an abatement of 40 %) and the VAT rates are around 5 to 5.5 per cent.

Introducing a rate beyond 5 Per cent would result in high working capital requirements coupled with hasty business environment. The industry would bear the brunt of high compliance cost due to the proposed GST, Former President of Karnataka hosiery and garment association, Sajjan Raj Mehta has said.

Therefore, he said, a higher rate would result in small businesses facing difficulties. It is pertinent to note that this will have a negative impact on employment due to cost cutting measures.

The fitment of rates as of now is near to the current taxation of the products. Keeping this in the background, 5 Per cent would be an ideal rate to be made applicable on readymade garments and apparels, Mehta said Proposing the rate of GST to be 5 per cent for the overall benefit of the industry.

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