Proposed GST hike threatens survival of Kashmir's handicrafts

Srinagar, Dec 8: A proposed significant increase in Goods and Services Tax (GST) rates for textiles and handicrafts has sent shockwaves through Jammu and Kashmir's artisan communities, with stakeholders warning that the move could potentially decimate the region's centuries-old shawl-making craft.

The Group of Ministers (GoM) on Rate Rationalization, led by Bihar Deputy Chief Minister Samrat Chaudhary, has recommended a dramatic GST rate escalation that would raise taxes on Kashmiri shawls, crewel items, and other textile products from the current 12% to 28% for items priced above ₹10,000.

In a compelling letter addressed to the Commissioner Secretary of Industries and Commerce, the Directorate of Handicraft emphasized the critical nature of the proposed tax change. "Pashmina industry is an iconic part of Jammu and Kashmir's heritage, characterized by its delicate craftsmanship and labor intensive processes," the letter stated.

"Each piece of Pashmina represents months of meticulous handwaving by skilled artisans, many of whom are women in rural and remote areas."

The letter further warned, "The proposed hike in GST from 12% to 28% for Pashmina products priced above Rs 10,000 threatens the survival of this fragile industry. If implemented, this would not only jeopardise the livelihoods of artisans but also erode a vital aspect of Jammu and Kashmir's cultural heritage."

Javid Ahmad Tenga, President of the Kashmir Chamber of Commerce and Industry (KCCI), voiced strong opposition to the proposed changes. "We will take up this issue at all forums," he declared. "It would be catastrophic for handicrafts."

The proposed tax structure threatens an industry that provides critical livelihoods to over 250,000 artisans, with a significant proportion being women from rural and marginalized communities who have inherited generational skills of intricate craftsmanship.

The handicraft sector, particularly the renowned Pashmina industry, represents a delicate ecosystem where each product embodies months of meticulous handwork. Artisans invest extensive manual skills and time to create unique, handmade items that generate over 75 percent of their value through labor-intensive processes.

Dealers in the sector are particularly concerned about the tax implications when supplying products from Kashmir to national markets. The transition from Value Added Tax (VAT) to GST has already complicated their economic landscape, creating substantial financial burdens, especially given the unpredictable nature of handicraft sales where items might remain unsold for months or even years.

"When supplying products from a manufacturing unit in Kashmir to a showroom in Delhi, the application of a hefty 28 percent GST creates a substantial financial burden," industry stakeholders explained. "The uncertainty of product marketability—where an item might remain unsold for months or even years—adds tremendous financial pressure."

The proposed tax structure effectively threatens to erode the capital of small and medium enterprises, creating a precarious economic environment that could permanently destabilize Kashmir's artisanal ecosystem. Each percentage point of tax increase represents not just a financial challenge, but a potential blow to a centuries-old tradition of craftsmanship.

As the GST Council prepares to deliberate these proposed changes, the future of Kashmir's handicraft sector hangs in a delicate balance.