Innerwear shopping to set to get costlier

Kolkatta: Be prepared to shell out more from your wallet, the next time you plan to buy any hosiery or innerwear products. The manufacturers fear they will be adversely impacted as well. Little wonder therefore, that the hosiery manufacturers across the country are up in arms against the Modi 2.0 government for suddenly amending the GST rates on hosiery and knitwear products through a new notification.

The change in GST rate from 5 per cent to 12 per cent for fabrics and garments priced below Rs 1,000 through a recent notification [No. 14/2021-Integrated Tax (Rate) dated November 18, 2021], will also make the final product in this range costlier.

A large number of hosiery units operate in the informal sector (85 per cent-90 per cent), with lower investments. West Bengal, Tirupur (Tamil Nadu) constitute the most production, around 40 per cent, and 35 per cent respectively, an estimate suggests. Besides, Mumbai, Saharanpur, Ludhiana, Delhi, Ahmedabad, and Kanpur also have hosiery units. Federation of the Hosiery Manufacturers Association of India (Fohma), the apex body representing the interests of Indian hosiery and knitwear industry, has already taken strong exception to the latest move by the government and aired its deep anguish.

"The hosiery and knitwear (including the garments industry) in India employs close to 11 million workers, of which 8 million are engaged in the domestic sector and 3 million in the export sector. Even if there is an 18 per cent shrinkage in workforce (estimated), the job loss will be around 1.44 million. An increase in GST by as much as 7 per cent will lead to a much higher level of job losses – possibly in excess of 2 million," said KB Agarwala, President of Fohma.

The latest move by the Centre and the changes in tax structure, according to Agarwala, will affect the total textile industry and the prices of all fabrics, hosiery and garments priced below Rs 1,000 will be increased from 5 per cent to 12 per cent. This in turn would have a cascading effect and result in additional cost increase of hosiery items. The poorer sections of the society who buy such products below Rs 1,000 would be affected badly. It is important to understand that more than 80 per cent of India's total garment market and 99 per cent of the hosiery market is below the Rs 1,000 price levels. Currently, the industry is already reeling under a totally unprecedented price increase of its raw materials, especially yarn, packing material, and freight. The market is likely to see a 20 per cent to 25 per cent price increase in the garments and hosiery sector immediately even without the revised GST rate implication.