GST hike of 28% on textiles will render lakhs of Kashmir artisans jobless: KCCI

Srinagar, Dec 6: The Kashmir Chamber of Commerce and Industry (KCC&I) has made a passionate plea to Prime Minister Narendra Modi, Lieutenant Governor Manoj Sinha, and Chief Minister Omar Abdullah regarding the potentially devastating proposed GST slab hike on textile and handicraft products.

The Group of Ministers (GoM), chaired by Bihar's Deputy Chief Minister Samrat Chaudhary, has proposed a significant GST rate increase during their meeting on December 2, 2024. The proposed taxation structure would dramatically alter the economic landscape for textile and handicraft products: textiles priced between Rs 1,500 and Rs 10,000 would be taxed at 18 percent, while textiles above Rs 10,000 would fall under the highest GST slab of 28 percent. This proposal is scheduled for consideration during the 55th GST Council meeting on December 21, 2024, in Jaisalmer.

A statement said that the implications of this proposed hike are deeply concerning, especially for the economic landscape of Jammu and Kashmir. The textiles and handicrafts sector is a cornerstone of the region's economy and cultural identity, providing direct and indirect employment to over 2.5 lakh artisans, with many being women and individuals from marginalised communities.

:Handicraft products represent a critical economic sector characterized by their high labor dependency, with artisans and craftspeople contributing extensive manual skills to create unique, handmade items. These products typically generate over 75 percent of their value through wages, making them inherently labor-intensive," KCCI in a statement said

The proposed GST rate increase would have catastrophic consequences. When supplying products from a manufacturing unit in Kashmir to a showroom in Delhi, the application of a 28 percent GST creates a substantial financial burden. Dealers must bear this tax expense without guaranteed sales assurance, with products potentially remaining unsold for months or years. Such a tax structure would effectively erode the capital of small and medium enterprises, making it increasingly difficult for traditional craft businesses to maintain financial stability.

The impact on employment and livelihood would be severe. The handicrafts sector provides crucial opportunities to both educated and uneducated individuals, with particular empowerment for women who constitute a large percentage of the workforce. If the GST rate increases to 28 percent, the resultant rise in product prices would render these goods unaffordable to domestic and international consumers, drastically reducing demand and forcing many artisans into unemployment, it said

Jammu and Kashmir's handicrafts are renowned worldwide for their intricate craftsmanship and cultural significance. The proposed GST hike could sound a death knell for this heritage, as reduced demand will discourage artisans from continuing their craft. The economic ripple effects would disrupt the entire value chain, including suppliers, traders, exporters, and allied service providers, causing a cascading impact on the local economy.

It is pertinent to note that the Chief Secretary had previously written to the Ministry of Commerce and Industries, recommending a reduction in the GST slab for handicrafts from 12 percent to 5 percent. This forward-looking step aimed to promote the sector and ease financial burdens on artisans and traders. The current proposal to increase GST to 28 percent runs contrary to these efforts and will severely undermine the industry's growth potential, KCCI said.

KCC&I has sought immediate intervention to prevent this detrimental policy change. The organization requests: Advocacy for reduction of the current GST rate to 5 percent, highlighting the unique challenges of the region's economy, ensuring stakeholder voices are heard at the national level.

The chamber emphasises that this is not merely an economic issue, but a critical matter of preserving cultural heritage and supporting the livelihoods of thousands of skilled artisans.