Plead for Zero Tax: 67% of India's Handloom Weavers, Mostly Dalits, Adivasis & OBCs Earn Under Rs 5,000/Month!

Bapatla/Andhra Pradesh – In a fervent plea to protect India's ancient handloom heritage and the livelihoods of millions of marginalized weavers, the National Federation of Handlooms and Handicrafts (NFHH) has urged Prime Minister Narendra Modi to intervene immediately and push for a zero percent Goods and Services Tax (GST) on handloom products priced above Rs 2,500.

The federation's representation highlights the dire economic plight of weavers from Other Backward Classes (OBC), Scheduled Castes (SC), Scheduled Tribes (ST), and minority communities, who form the backbone of this labor-intensive sector but are grappling with poverty, declining demand, and unfair competition from powerlooms and mill-made fabrics.

The handloom industry, often hailed as the second-largest employer in rural India after agriculture, supports over 45 lakh workers operating on 35.22 lakh active looms, providing an average of 234 man-days of employment annually. However, NFHH emphasizes that these weavers, predominantly from vulnerable and marginalized groups, are facing an existential threat due to recent GST policy changes.

According to the federation, the 56th GST Council meeting, held on September 3-4, under the chairmanship of Union Finance Minister Nirmala Sitharaman, decided to impose an 18% GST on handloom products exceeding Rs 2,500 from September 22. This marks a sharp increase from the previous 5% slab on items above Rs 1,000, a move that NFHH argues will "totally ruin the handloom sector" by exacerbating cost pressures and eroding market competitiveness.

The Plight of Marginalized Weavers: A Story of Poverty and Exploitation

Drawing from the 4th Round of Handloom Census (2019-20), the federation reveals that a staggering 67.1% of weavers earn less than Rs 5,000 per month, while 26.2% make between Rs 5,001 and Rs 10,000. Only a minuscule 6.7% of weaving households cross the Rs 10,000 threshold. These figures paint a grim picture of intergenerational poverty, where skilled artisans preserving India's national heritage and traditions are trapped in cycles of low wages and exploitation.

Weavers from OBC, SC, ST, and minority backgrounds, who constitute the majority in this sector, often work in rural areas with limited access to resources. NFHH points out that entire families, including women and elders, labor for over 10 hours a day on looms, yet their earnings fall short of even the minimum wages recommended by government bodies. For instance, the Periodic Labour Force Survey (PLFS) and reports from the Directorate of Economics and Statistics indicate that a family of three needs at least Rs 16,452 monthly for basic sustenance, based on 2018 prices. The 8th Pay Commission is set to raise minimum wages to Rs 30,000 per month from January 1, 2026, but handloom workers' incomes pale in comparison, often below MGNREGA daily wages of Rs 250-325.

Compounding this misery is the uncontrolled spike in raw material costs, such as cotton and silk yarn, which has led to a decline in fiber consumption and product demand. Between 2019 and 2021, ethnic handloom items like sarees, check shirtings, dhotis, kurtas, pyjamas, and salwar kameez saw reduced sales due to higher prices compared to cheaper powerloom and mill-made imitations flooding the market. NFHH accuses the government of inaction under the Competition Commission of India (CCI) and the Handloom Reservation Act, allowing powerlooms to masquerade as handlooms without repercussions. This unfair competition has left 93.3% of weavers, primarily elderly and rural, struggling with plain fabric production, earning meager incomes while facing global and domestic market pressures.

Artisans in the related handicrafts sector fare no better, with similar poverty levels. NFHH warns that the proposed GST hike will further marginalize these communities, pushing them toward unemployment and migration. "Handloom weavers continue to preserve handloom weaving as our National Heritage and Tradition, but they are very poor," the representation states, underscoring the cultural and social value of their work amidst economic neglect.

GST Hike: A Double-Edged Sword for India's Textile Sector

The GST Council's decision comes amid efforts to shield India's textile industry from global tariffs, particularly the 63.9% duties imposed by the United States on Indian textiles and apparel. While reductions in GST from 18% to 5% on man-made fibers (MMF), yarns, garments, and made-ups aim to boost "Make in India" initiatives and combat cheap imports from countries like Bangladesh and Vietnam, NFHH argues that this protectionism disproportionately harms the handloom segment.

The federation contrasts the labor-intensive nature of handlooms, where one loom employs six pre-loom workers for processes like yarn dyeing, winding, sizing, knotting, and weaving, with the mechanized efficiency of powerlooms and mills. Citing the Sri B. Sivaraman Committee Report, NFHH highlights how handlooms generate vast rural employment, yet their products, often priced above Rs 2,500 due to intricate motifs, selvedge borders, and zari work, will now face an 18% tax burden. This, combined with yarn price hikes, could inflate costs, for example, a meter of 60x40 count check shirting at Rs 320 versus an 80x80 count at Rs 420, making handlooms unaffordable and unviable.

Moreover, handloom exports have dwindled from 0.889% of total textiles and apparel (including handicrafts) in 2019-20 to just 0.48% in 2023-24, totaling a mere USD 140 million against the sector's USD 35,874 million. Domestic sales, worth over Rs 3,29,000 crore annually (based on 2018-19 production of 8,000 million square meters at Rs 297.6 per capita), are the lifeline, but the GST increase threatens to disrupt this by favoring synthetic textiles and MMF garments.

NFHH's Key Requests: A Roadmap for Revival

In its detailed representation, NFHH has outlined specific demands to revive the sector and align with India's commitments to Swadeshi, Atma Nirbhar Bharat, and net-zero carbon goals. The federation stresses that handlooms promote sustainable, pollution-free production using natural fibers, contrasting with environmentally harmful man-made alternatives.

1. Immediate Implementation of 0% GST on Handloom Products: Starting September 22, 2025, scrap the 18% slab for items above Rs 2,500 to ease working capital burdens, reduce costs, and enhance cash flows for weavers.

2. Zero GST on Natural Fibers: Extend zero tax to all natural materials like cotton, wool, silk, jute, and linen used in handlooms and handicrafts to strengthen rural value chains.

3. Abolish GST on Inter-State Sales: Remove tax requirements for exhibitions and retail, where most artisans sell, to boost accessibility and sales.

4. Separate HSN Codes: Introduce simplified codes to differentiate handmade products from machine-made ones, preventing mislabeling and ensuring fair competition.

NFHH also urges the garment industry to prioritize handloom fabrics for lower GST benefits and calls for policy recognition of the sector's 1.41 crore rural jobs. The representation, signed by Mohan Rao Macherla, copies key officials including Finance Minister Nirmala Sitharaman, Textiles Minister Giriraj Singh, and others, drawing data from the Ministry of Textiles' Annual Report 2024-25 and Lok Sabha questions.