SRINAGAR: The Kashmir Chamber of Commerce and Industry (KCC&I) has made an urgent appeal to Prime Minister Narendra Modi, Chief Minister Omar Abdullah and Lieutenant Governor Manoj Sinha regarding the potentially devastating impact of the proposed GST slab hike on textile and handicraft products.
The Chamber in a statement said, “The Group of Ministers (GoM), chaired by Bihar’s Deputy Chief Minister Samrat Chaudhary, recommended a substantial GST rate increase during their meeting on December 2, 2024. Under the new proposal, textiles priced between Rs 1,500 and Rs 10,000 would be taxed at 18 percent, while textiles over Rs 10,000 would fall under the highest GST slab of 28 percent. This proposal is slated for discussion at the 55th GST Council meeting on December 21, 2024, in Jaisalmer.”
“The implications of this proposed hike are deeply troubling, particularly for the economic landscape of Jammu and Kashmir, where textiles and handicrafts are vital to both the economy and cultural identity. The sector provides direct and indirect employment to over 2.5 lakh artisans, many of whom are women and individuals from marginalized communities,” it said.
The KCCI said handicraft products, in particular, are highly labor-intensive, with artisans contributing vast manual skills to create unique, handmade items. Over 75 percent of the value of these products comes from wages, making the sector dependent on affordable production costs. The proposed GST increase would severely disrupt this delicate balance, with catastrophic consequences for the region’s economy, it said.
“For instance, when supplying products from a manufacturing unit in Kashmir to a showroom in Delhi, the application of a 28 percent GST would create an enormous financial burden. Dealers would be forced to absorb this tax expense without the assurance of sales, leaving products unsold for months or even years. This scenario would erode the capital of small and medium enterprises, threatening their financial stability and jeopardizing their ability to survive,” the Chamber said.
The KCCI said the effect on employment would be equally severe. The handicraft sector provides vital job opportunities to both educated and uneducated individuals, particularly empowering women, who constitute a large proportion of the workforce, it argued. “If the GST rate increases to 28 percent, the resultant rise in product prices would make these goods unaffordable for both domestic and international consumers, leading to a drastic reduction in demand and mass unemployment among artisans,” it said.
Jammu and Kashmir’s handicrafts are renowned worldwide for their intricate craftsmanship and cultural significance. However, the proposed GST hike could decimate this heritage, as reduced demand would discourage artisans from continuing their craft. The economic ripple effect would disrupt the entire value chain, including suppliers, traders, exporters, and allied service providers, causing a cascading impact on the local economy, the statement said.
The KCCI said the Chief Secretary of Jammu and Kashmir 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, a move aimed at promoting the sector and easing financial burdens on artisans and traders. It said the current proposal to increase the GST rate to 28 percent contradicts these efforts and would severely undermine the sector’s growth potential.
In light of these concerns, KCC&I urges immediate intervention to prevent this harmful policy change, the statement said, adding that the organisation calls for the reduction of the current GST rate to 5 percent, considering the unique challenges of Jammu and Kashmir’s economy, and emphasises the need for the voices of local stakeholders to be heard at the national level.
KCCI urges immediate intervention against proposed GST hike on textile, handicraft products
