Lucknow’s chikan industry faces GST crisis

Lucknow: The famous chikan industry in Lucknow is facing a major crisis, following the GST which brings the industry in the tax net.

“Chikan goods have been exempted from taxation since Independence but now the government has put them in the taxable category of readymade clothes,” said Pramesh Rastogi, member of the Akhil Bharatiya Udyog Vyapar Mandal.

“Chikan garments below Rs 1,000 will now invite 5 per cent tax and those costing more will be taxed at 12 per cent. The chikan industry is no longer as robust as it used to be with consumers opting for readymade wear,” he added. 

According to him, the cost of chikan garments has increased by 25 to 30 per cent after GST and the artisans are being rendered jobless because their wages are being cut.

“We are not taking any new orders and are neither getting raw material under the picture become clearer. This is a hand- embroidery based industry and workmanship naturally comes at a price. If we further increase the prices of finished products, the sales will dip further,” said Arup Khanna, a retail dealer.

There are 11 processes before the embroidered cloth finally reaches the customers and these include including dyeing, cutting, sewing, printing, embroidery, washing, “charak”, etc and more than six workers are employed at each step.

“We will also have to start paying 12 per cent service tax for employing artisans for various steps of manufacturing chikan clothes and this is bound to lead to a proportionate hike in the cost of the garment,” said Haroon, a wholesaler. The artisans who do chikan embroidery are also facing an uncertain future.

“We earn Rs 1,500-2,000 per month and are already facing tough competition from machine embroidered chikan cloth that is coming in from China. Since the past one week, I and my three sister have not received any order from the sellers even though this is the peak season for us,” said Nikhat Khan, who does chikan embroidery.

There are at least 3.5 lakh artisans, mostly women, who depend on the chikan business for their livelihood. Ms Runa Banerjee co-founder of Sewa (Self Employed Women’s Association) said, “After GST, there is an overall increase of 28 per cent in prices of stitched as well as unstitched chikan clothes and this has already led to a drop in sale.”

“Earlier, we had to pay no tax on fabric and yarn but now they are taxable and this would adversely impact the chikan industry in UP,” she said.