GST rationalisation in textiles to remove distortions, support exports

NEW DELHI: The rationalisation of GST rates for the textile sector is expected to reduce costs, support exports, sustain jobs and stimulate domestic consumption to catalyse India’s textile and apparel market towards the $350 billion target by 2030, the government said on Thursday.Key GST rationalisations include a 5 per cent rate up to Rs 2,500 per piece for readymade garments and made-ups from Rs 1,000 earlier.

This makes affordable apparel cheaper, particularly for middle-class and low-income households.

“It is expected to revive demand in Tier-2/3 towns and rural markets. Given the labour-intensive nature of garmenting, higher demand will sustain and expand employment, especially for women in stitching, tailoring, and finishing units.

“The move will also support Make in India brands, helping them compete with cheap imports in low and mid-price segments,” the Textile Ministry said.

Besides, the GST has been reduced from 18 per cent to 5 per cent for fibres and lowered from 12 per cent to 5 per cent on yarns.This corrects the inverted duty structure (IDS), aligns fibre-yarn-fabric rates, and removes long-standing working capital burdens on manufacturers.”With a large share of MMF production in small and medium units, the cut eases cost pressures, strengthens cash flows, and makes Indian MMF-based garments globally more price-competitive, supporting India’s ambition to emerge as a hub for synthetic textiles and MMF garments,” the ministry said.

The reforms correct anomalies at the fibre stage, reduce costs at the yarn and fabric stages, improve garment affordability, revive demand at the retail stage, and enhance export competitiveness, it added.

The reforms are fully aligned with the Prime Minister’s visionary 5F formula (Farm to Fibre to Factory to Fashion to Foreign), which seeks to position India as a global textile powerhouse, the ministry said.

The GST rationalisation in textiles will remove distortions, lower production costs, boost demand, support exports, and enhance India’s global competitiveness, it added.