India working on integrated tax framework for textile sector

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The Indian government is drawing up a unified tax framework for the country’s textile industry, aiming to give manufacturers firmer tax certainty and broader relief on duties levied on raw materials and machinery so they can compete better in world markets, according to people familiar with the talks.

The framework under discussion may cover goods and services tax on textile products and inputs, basic customs duties on raw materials and imported textile machinery, and anti-dumping duties on selected man-made fibre and yarn imports.

Its purpose is to tackle tax and duty-related cost pressures at every stage of production, from fibre and yarn through to fabric and finished goods, while making the regime more predictable for producers.

The work comes as policymakers intensify their focus on growing textile manufacturing, giving priority to technical textiles, upgrading traditional clusters and lifting India’s share of global markets.

“A senior official said the sector is a government priority and that officials are pursuing a single, integrated tax structure to make it competitive, rather than piecemeal adjustments,” ET reported.

The government has already been readying the rollout of the ₹40,000-crore Textile Expansion and Employment Scheme, unveiled in the 2026-27 budget, which will back machinery upgrades, technology adoption and shared testing facilities in traditional textile clusters.

The official added that industry representatives have argued that investment support alone may prove insufficient if manufacturers continue to face high or uneven duties on raw materials, intermediates and machinery.

Unified tax framework in works for textiles
The Department of Revenue is working alongside the textiles ministry and examining the request made by industry representatives.

Textiles account for about 9% of India’s merchandise exports and sustain over 45 million jobs. Industry players say India faces fierce competition in man-made fibre textiles and apparel from China, Bangladesh and Vietnam.

The textiles ministry has raised with the Department of Revenue the question of scrapping customs duty on caprolactam, nylon chips, rayon-grade wood pulp and cotton.

It has also recommended that anti-dumping duties on elastomeric filament yarn and viscose rayon filament yarn be removed or postponed, pointing to their effect on downstream producers, micro, small and medium enterprises, and employment.

Separately, industry bodies have asked for a six-month waiver of basic customs duty on five polyester-chain products: monoethylene glycol (MEG), purified terephthalic acid (PTA), partially oriented yarn (POY), fully drawn yarn (FDY) and drawn textured yarn (DTY).

Temporary duty exemptions on MEG and PTA were withdrawn in July, prompting fresh pleas from the sector to safeguard the viability of domestic manufacturing. The ministry has further asked the department to revisit machinery costs.

Image courtesy: Wikipedia

Bhargav Pathak
Bhargav Pathakhttps://textilesresources.com
With a passion for the textile, apparel, and fashion industry, I embarked on a journey fueled by education from NIFT Gandhinagar and affiliation with NDBI at NID Ahmedabad. Since 2006, I've contributed to various corporate ventures, specializing in B2B, B2C, SaaS, and AI products within the textile domain. In July 2023, I launched TextilesResources.com, a knowledge hub offering the latest news, articles, and soon-to-come features like interviews and a trade fair calendar. Grateful for the growing community, we've recently introduced a Business Directory for enhanced visibility. Join us on LinkedIn and stay connected with the ever-evolving textile landscape!

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