Pashmina shawls not to be considered for higher GST slabs: Omar

Jammu and Kashmir Chief Minister Omar Abdullah speaks to the media. File.
| Photo Credit: ANI

J&K Chief Minister Omar Abdullah on Saturday (December 21, 2024) said his government will ensure that famed Pashmina shawls were not considered in the higher slabs of Goods and Services Tax (GST) and warned that such a move would be life-threatening to the Pashmina shawl industry.

Mr. Abdullah, who attended the 55th meeting of the GST Council in Rajasthan, said there were some things that were agreed on, some things were deferred during the meeting. “There had been a lot of speculation that GST on shawls, particularly Pashmina shawls, will be hiked, so we had come prepared to ensure that wouldn’t happen. Thankfully, it wasn’t taken up and we will ensure that in the future also, something like this is not considered because it would be life-threatening to our Pashmina shawl industry,” Mr. Abdullah said.

There were growing protests in Kashmir from political parties, including the Peoples Democratic Party (PDP) and traders in the past few days against the proposed GST hike on Kashmiri shawls from 12% to 28%. Former J&K Finance Minister Haseeb Drabu also opposed the move. “The rate band of 28%, the highest band, is a punitive rate meant to reduce the consumption of what are called “demerit” goods. Indeed, a subset within the rate band is the “sin goods” category like cigarettes, for instance. By taxing Kashmiri shawls at 28%, the integrity of the GST rate regime is being impaired. The Kashmiri shawl seems to have been put in this bucket on the spurious notion that a Kashmiri shawl above ₹10,000 is a luxury product and hence to be taxed at the highest punitive rate to reduce the consumption in this category. But that is a flawed understanding,” Mr. Drabu said, in a write-up for a local daily. 

PDP leader and former Minister Naeem Akhtar said such a move was an “attempt to crush the artistic genius of Kashmir under the weight of excessive taxation.”

“The heavy taxation would make Kashmiri shawls unaffordable, threatening to collapse the centuries-old industry. This is akin to reviving the oppressive practices of the despotic Maharaja rule, where shawl makers were crushed under heavy taxation. Are we witnessing a deliberate attempt to plunge Kashmir into deeper crises,” asked Mr. Akhtar.

The latest development at the GST meeting on Saturday has calmed the nerves to some extent. “We thank Union Finance Minister Nirmala Sitharaman and the members of the GST Council for their considerate decision to not increase the GST rate on our traditional Kashmiri shawls. We are hopeful that incoming GST council meetings won’t see any hike on GST of Kashmir shawls,” said Faiz Ahmad Bakshi, secretary general of the Kashmir Chamber of Commerce and Industries (KCCI).

According to the KCCI, the shawl industry supports over 300,000 artisans and provides livelihood opportunities to many from marginalised communities. “The proposed hike would have dealt a catastrophic blow to the Kashmiri shawl industry, potentially categorising 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,” Mr. Bakshi said.