Srinagar: Artisans in Kashmir heaved a sigh of relief after the proposed Goods and Services Tax (GST) hike on Kashmiri shawls, especially those made from Pashmina wool, was not taken up at the meeting of the GST Council.
The 55th council’s meeting led by Finance Minister Nirmala Sitharaman was held at Rajasthan’s Jaisalmer on Saturday (December 21, 2024). Jammu and Kashmir Chief Minister Omar Abdullah who considered the hike "life-threatening" for the craft represented Jammu and Kashmir in the meeting.
“Thankfully, it wasn’t taken up and we will also ensure that in the future, something like this is not considered because it would be life-threatening to our Pashmina shawl industry,” he told reporters after the meeting.
Later in the day, he also clarified the same in a post on X. "Contrary to media speculation & some ill-informed commentary there was no proposal or discussion to increase VAT on Pashmina shawls to 28%. We had gone to Jaisalmer fully prepared to defend the interests of our shawl weavers & handicrafts persons but the defence was not necessary," Abdullah said in the post.
Contrary to media speculation & some ill informed commentary there was no proposal or discussion to increase VAT on Pashmina shawls to 28%. We had gone to Jaisalmer fully prepared to defend the interests of our shawl weavers & handicrafts persons but the defence was not…
— Omar Abdullah (@OmarAbdullah) December 21, 2024
His comments came amid criticism from PDP chief Mehbooba Mufti, who alleged there was a proposal to hike the tax on shawls which would "finish" Kashmir's famed craft.
The proposed hike and its impact
The proposed GST hike from 12 to 28 percent on Kashmir shawls valued over Rs 10,000 had worried Kashmiri artisans and traders. The Group of Ministers on rate rationalisation led by Deputy Chief Minister of Bihar Samrat Chaudhary had recommended raising taxes on textile products including Kashmiri shawls and crewel items.
The Kashmir Chamber of Commerce and Industries (KCCI) said the proposed hike would have dealt a ‘catastrophic blow’ to the Kashmiri shawl industry, potentially categorizing these cultural treasures under a 'sin tax' bracket.
“This classification would have been particularly harmful to the artisans who depend on this craft for their livelihood,” said KCCI secretary general Faiz Ahmad Bakshi.
The Trade body which had been vocal about the hike had written to Prime Minister Narendra Modi, Lieutenant Governor Manoj Sinha, Chief Minister Omar Abdullah and heads of other chambers and export promotion Councils.
Bakshi urged Sitharaman and the members of the GST Council for their considerate decision to not increase the GST rate on traditional Kashmiri shawls.
“We are hopeful that in coming GST council meetings as well, there won’t be any hike on GST of Kashmir shawls. The shawl industry is not just a commercial entity but a cultural heritage that supports over 300,000 artisans, providing essential livelihood opportunities to many from marginalized communities,” he said.
Artisans and sellers react
A Pashmina artisan Rouf Ahmad Qureshi from Srinagar’s Narwara expressed relief over the move while listing the long-term consequences of the proposed hike. He said the additional tax would serve as a ‘deathblow’ to them and their craft as they would be forced to quit their age-old source of livelihood.
A Pashmina shawl dealer Ajaz Sheikh based in New Delhi and has participated in international exhibitions said that clients are not ready to pay 12 percent GST on Kashmir textiles.
“This is mainly because not many countries tax indigenous products from artisans. Out of 10, only 2 are ready to pay tax. Even I had to pay from my own pocket Rs 57000 as GST on shawls,” he added.
Besides, the ruling National Conference, Peoples Democratic Party and Peoples Conference led by Sajad Lone had opposed the move seeing the tax hike as a blow to the struggling handicrafts sector.
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