The Group of Ministers (GoM) on GST rate rationalisation has recommended that the existing nil GST exemption on handloom products and raw silk should continue, offering much-needed relief to artisans and small weavers across the country, officials said.
The panel has advised maintaining the status quo by keeping handloom items produced by traditional weavers at 0% GST, as opposed to the 5% levy that was originally under consideration. It has also suggested retaining nil GST on raw silk and silk weaving materials, which had earlier been reduced from 5%.
Protecting Artisan Livelihoods
Officials familiar with the matter said the decision was aimed at safeguarding the livelihoods of lakhs of artisans and small-scale weavers, particularly in rural and semi-urban areas. The handloom and silk weaving sectors are highly employment-intensive, yet operate with low profit margins, making them particularly vulnerable to tax changes.
Industry bodies had earlier warned that even a small GST levy on handloom items would:
- Push up product costs.
- Erode the competitiveness of locally made goods.
- Hurt demand in both domestic and international markets.
By recommending continuation of the exemption, the GoM has attempted to balance revenue mobilisation with the need to support India's traditional crafts sector.
Cultural and Economic Importance
India's handloom industry is not only a source of income for millions of families but also an important part of the country's cultural heritage and export portfolio. The sector was valued at over Rs 27,000 crore in exports in FY24, with products such as silk sarees, handwoven fabrics, and traditional textiles enjoying strong global demand.
Next Step: GST Council Decision
The GoM's recommendations will be placed before the GST Council, chaired by Union Finance Minister Nirmala Sitharaman, in its upcoming meeting in New Delhi next week. If accepted, the move will be viewed as a recognition of the sector's socio-economic role and the government's commitment to "next-generation GST reforms" that remain sensitive to vulnerable communities.
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