Fashion
India’s new GST makes artisan-made ethnic wear costlier
Before GST restructuring, garments priced above ₹1,000 were taxed at 12 per cent, while those below that threshold attracted 5 per cent GST. The GST Council has now raised the price threshold to ₹2,500. Under the new system, garments priced up to ₹2,500 attract 5 per cent GST, while those priced above fall into the next slab of 18 per cent, as the 12 per cent slab was removed. This has effectively increased the tax rate on expensive garments. Branded apparel, premium winter wear like coats and suits, wedding attire, and traditional ethnic wear—often priced above ₹2,500—are now costlier for consumers.
India’s next-gen GST reforms have simplified taxation with a uniform 5 per cent rate and resolved the inverted duty structure.
However, garments priced above ₹2,500 now face 18 per cent GST, making premium apparel, artisan-made ethnic wear, and wedding attire costlier.
Industry bodies warn this will hurt affordability, promote grey market activity, and urge a review of price-based slabs for garments.
Industry bodies have expressed concern over price-based GST slabs for garments. The Retailers Association of India (RAI) stated, “Price-based thresholds will create distortions and promote grey market activity. They will lead to misreporting, compliance challenges, and harm organised retail—especially mid- and premium-priced products.” RAI added that the new tax structure could discourage domestic manufacturing, undermine Make in India, and artificially force consumers to downgrade purchases rather than expand demand.
The higher 18 per cent tax rate on garments above ₹2,500 is expected to hurt middle-class affordability, weaken the organised retail sector, and impact categories like wedding apparel, winter wear, artisan-made products, festive clothing, and traditional weaves.
RAI said that all garments should ideally be taxed at 5 per cent, or at the very least, a more reasonable price threshold should be established.
The Clothing Manufacturers Association of India (CMAI), however, welcomed the increase in the price threshold for the 5 per cent tax rate, calling it a “positive move”. But it urged the GST Council to abolish price-based taxation altogether. All garments, irrespective of price, should be taxed at 5 per cent, or at least a more reasonable and realistic price level should be set, CMAI said.
It further noted that garments above ₹2,500 are also widely consumed by the middle class, including woollen clothing, occasion wear, Indian traditional clothing, handlooms, and embroidered artisan-made products. All these will now see a significant price rise due to the revised GST rate. CMAI strongly urged the GST Council and government to review this aspect.
Fibre2Fashion News Desk (KUL)
The country imported textile and textile materials worth N 228.83 billion in the first quarter (Q1) this year, N 337.12 billion in Q2 and N 248.32 billion in Q3.
Industry experts blame policy failure, weak execution of credit initiatives, abandonment of promised institutional reforms, pervasive corruption and structural bottlenecks like weak cotton farming, insecurity and the inability to scale locally-produced polyester for the decline, according to Nigerian media reports.
Nigeria’s textile imports rose to N 814.27 billion in January-September 2025—a 47.43-per cent YoY rise despite repeated government claims of the sector’s revival.
Rising imports indicate a weak domestic textile industry.
Industry experts blame policy failure, weak execution of credit initiatives, abandonment of promised institutional reforms, pervasive corruption and structural bottlenecks for the fall.
Hamma Kwajaffa, director general of the Nigerian Textile Manufacturers Association, lamented that the 10-per cent tax on imported textiles—which was introduced when the ban on textile imports was lifted so that the amount collected can be ploughed into domestic textile production—has not been directed to improve the private textile sector.
Kwajaffa pointed to the failure to create a dedicated textile development fund domiciled with the Bank of Industry.
Conflicting positions among top officials had stalled any action related to the sector and repeated workshops and announcements without execution had yielded no tangible outcome, Kwajaffa added.
Fibre2Fashion News Desk (DS)
According to updated Eurosystem staff projections, headline inflation is expected to average 2.1 per cent in 2025, easing to 1.9 per cent in 2026 and 1.8 per cent in 2027, before returning to 2.0 per cent in 2028. Inflation excluding energy and food is forecast at 2.4 per cent in 2025, gradually declining to 2.0 per cent by 2028. Inflation for 2026 has been revised upward, mainly due to expectations that services inflation will fall more slowly than previously anticipated, the Governing Council of the ECB said in a press release.
European Central Bank has kept its key interest rates unchanged, maintaining confidence that inflation will stabilise at the 2 per cent target.
Updated projections show inflation easing gradually over the coming years, with a slight upward revision for 2026 due to persistent services prices.
Economic growth forecasts have been revised higher, supported by stronger domestic demand.
The ECB also revised its economic growth outlook higher compared with its September projections. Growth is now expected to reach 1.4 per cent in 2025, 1.2 per cent in 2026 and 1.4 per cent in 2027, with expansion projected to remain at 1.4 per cent in 2028. The improvement is driven largely by stronger domestic demand across the euro area.
The Council reiterated its commitment to ensuring that inflation stabilises sustainably at the 2 per cent target. It emphasised that future monetary policy decisions will remain data-dependent and assessed on a meeting-by-meeting basis, without pre-committing to any specific interest rate path.
Fibre2Fashion News Desk (KD)
Nigeria’s textile imports up 47.43% YoY in Jan-Sept 2025
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