The Commerce Ministry is apprehensive about higher than expected GST rate to be levied on the gems and jewellery and textiles segments which may make exports non-competitive since in the international market, the margins are fixed.
The Gem and Jewellery Export Promotion Council (GJEPC) has demanded 1.25% GST rate and is unequivocally against being placed in 5% GST slab. Plus, GJEPC also wants exemptions for diamonds to continue. Presently, majority of jewellery products are taxed at a rate of 2.5-3% which varies from state to state.
The GST Council has bracketed the textiles industry in the 12% GST slab which has disappointed textile manufacturers who wanted to be taxed in the lowest bracket of 5%. The Clothing Manufacturers Association of India fears compliance issues and believes that the industry cannot be taxed at a uniform rate since there are massive variations in the textile products ranging from hand loom to branded wear.