Apparel exporters said nearly half of 12.9 million people employed in the $17.5-billion industry may lose jobs as one of India’s largest employment-generating sectors struggles to recover from the disruption caused by the Goods and Services Tax.

Many factories in Jaipur, Ludhiana and neighbouring areas have already shut down, PMS Uppal, president at Okhla Garment and Textile Cluster said in a press conference in New Delhi on Tuesday. “Almost 30 percent of export units have shut in the hosiery hub of Ludhiana. Six million employees may lose jobs this financial year.”

Exporters said production costs have risen because of new levies on air freight and outsourced work. And delayed refunds of taxes paid on inputs have added to their pain. Apparel shipments declined 39.2 percent in October over the same month last year, Uppal said. In April-October, they were down 5.8 percent and are expected to fall 15-20 percent in the year to March, he said.

Exporters were not required to pay tax on several inputs earlier, Ved Jain, former president of the Institute of Chartered Accountants of India, the governing body for the accounting profession, said. “GST now taxes inputs and reduces incentives like drawbacks. That’s hit the garment exporters.” Reducing input costs and higher incentives will help the industry, he said.