by Humaira Nabi
SRINAGAR: The Jammu and Kashmir government has submitted a proposal to bring all state handicrafts under a uniform Goods and Services Tax (GST) rate of 5 per cent, citing the labour-intensive nature of the industry. However, this push for uniformity comes at a time when a separate recommendation threatens to impose steep GST hikes on textiles, including Kashmiri shawls and carpets, sparking widespread concern in the region.
The proposal from Jammu and Kashmir seeks to lower the tax rate on handicrafts, with officials arguing that GST on such items essentially amounts to taxing human labour.
“Our government has moved the proposal with the argument that GST on handicrafts is basically a tax on human labour,” said Mahmood Ahmad Shah, Director of Handicrafts in Kashmir. “Currently, carpets are taxed at 5 per cent and shawls at 12 per cent. We want uniformity because shawls are as labour-intensive as carpets.”
At present, clothes priced below Rs 1000 are exempt from GST, while those priced at Rs 1000 or more attract a 5 per cent rate. Ready-made garments are taxed at 12 per cent, and synthetic or man-made fibres face an 18 per cent rate. However, a new proposal set for discussion at the 55th GST Council meeting in Jaisalmer on December 21 suggests a sharp increase in rates for higher-priced textiles. Under the proposed structure, textiles priced between Rs 1,500 and Rs 10,000 would face an 18 per cent tax, while those above Rs 10,000 would fall into the highest GST slab of 28 per cent.
The proposed hikes have raised alarms among artisans, traders, and political leaders, who fear the move could devastate the traditional industries that are vital to Kashmir’s economy. Kashmiri handicrafts, celebrated globally for their intricate designs and high-quality materials, are a significant source of livelihood for over 250,000 artisans, many of whom are women from marginalised communities.
Export figures underscore the sector’s importance, with the value of exports surging from Rs 563 crore in 2021-22 to Rs 1162 crore in 2023-24. In 2023-24, official sources said Jammu Kashmir exported handicrafts worth Rs 1162.29 crore. It included Rs 317.33 crore of carpets, Rs 477.24 crore worth Shawls, Rs 38.44 crore of papier machie, Rs 233.46 crore of chain stitch and crewl, Rs 40.28 crore of wood carvings, besides Rs 55.54 crore of sundry craft items.
The handicraft exports from Jammu and Kashmir were at Rs 929.25 crore in 2019-20, and then it started going down. It reached Rs 635.52 crore in 2020-21; Rs 563.13 crore in 2021-22; and then it grdaully started picking up again. It reached Rs 1116.37 crore in 2022-23, crossing the Rs 1000 crore psychological barrier after 2017-18 when it has recorded ax export of Rs 1090.12 crore.
Recently, the Chief Minister’s political adviser, Nasir Aslam Wani suggested his government is planning to adequately dovetail crafts sector with the tourism sector. However, it is now facing a huge tax load, if the proposal is approved by the Group of Ministers.
Artisans and industry representatives warn that the proposed GST hike could disrupt this growth. The Pashmina industry, which involves months of painstaking labour for a single product, is particularly vulnerable. “The proposed tax structure would be catastrophic for artisans and small businesses,” said Javid Ahmad Tenga, President of the Kashmir Chamber of Commerce and Industry. “Kashmir’s handicrafts, particularly Pashmina shawls, are not just economic assets but symbols of our cultural heritage.”
Political leaders across the spectrum have joined the chorus of opposition. Jammu and Kashmir National Conference Chief Spokesperson Tanvir Sadiq described the proposal as a threat to the region’s economy and cultural identity. “The proposed GST hike will place an unbearable burden on local artisans and traders, making Kashmiri products less competitive globally,” he said.
Apni Party President Syed Mohammad Altaf Bukhari echoed these concerns, stating that the higher tax rates would make traditional Kashmiri textiles unaffordable for many consumers, reducing demand and risking widespread unemployment in the sector.
The Directorate of Handicrafts has also sounded the alarm, warning in a letter to the Commissioner Secretary of Industries and Commerce that the proposed changes could “threaten the survival of this iconic industry” and erode a vital aspect of Jammu and Kashmir’s heritage.
Stakeholders have called on the GST Council to reconsider the tax hike, urging policymakers to account for the unique challenges faced by Kashmir’s handicrafts sector. They argue that the transition from VAT to GST has already created financial difficulties for artisans, and the proposed increases could push small and medium enterprises to the brink of closure.
As the December 21 meeting approaches, the fate of Kashmir’s handicrafts sector hangs in the balance. Artisans, traders, and political leaders are united in their plea to preserve not only the economic lifeline of thousands but also the cultural legacy of the region
