Revised GST Rates and Elimination of Inverted Duties to Boost Benefits for Textile Industry

Revised Goods and Services Tax (GST) rates adjusted positively impacts the MMF textiles industry, yet garments priced above ₹2,500 continue to face dissatisfaction within the council's latest decision.

, and Administrator

2025 September 13 . 9:06 PM

2 min read

Textile Sector: Adjustment of GST rates, Elimination of Inverted Duties to Provide Significant... — Textile Sector: Adjustment of GST rates, Elimination of Inverted Duties to Provide Significant Advantage

Revised GST Rates and Elimination of Inverted Duties to Boost Benefits for Textile Industry

In a significant move, the GST Council has revamped the Goods and Services Tax (GST) structure, with far-reaching implications for various sectors. One of the key changes concerns the textile industry, particularly the man-made fibre (MMF) sector, and its potential effect on consumer durable loans and vehicle loans.

The GST rate for MMF textiles has been reduced from 18% to 5%, bringing it at par with cotton. This reform, according to Sidharth Khanna, President of the National Institute of Textiles and Apparel (NITMA), will significantly lower costs across the MMF and technical textiles value chain, enhancing efficiency and export competitiveness.

However, the increases in GST for apparels priced over ₹2,500 have left manufacturers disappointed. The Clothing Manufacturers Association of India (CMAI) has requested the council to either place all garments, irrespective of the price, at 5% GST or fix a more reasonable and realistic price level. The CMAI has also pointed out that garments above ₹2500 are the only products in the entire value chain that are not at 5% GST.

The Retailers Association of India has recommended moving to a flat GST rate across product categories instead of relying on price-based thresholds. They express concerns about price-based thresholds, stating they could create distortions and promote grey market activity leading to misreporting and compliance challenges.

The GST on manmade fibres and yarns has also seen a decrease, from 18% and 12% respectively. The threshold for garments and apparels attracting a 5% GST has been increased from ₹1000 to ₹2,500.

The GST council's decision to rationalize rates in the textiles industry is expected to boost sales and exports. However, it is suggested that banks and Non-Banking Financial Companies (NBFCs) may see an uptick in demand for consumer durable loans and vehicle loans due to the GST 2.0 revamp. The article, published on September 4, 2025, does not provide specific facts about this uptick.

The Retailers Association of India has specifically mentioned that this could harm organised retail, especially for mid- and premium-priced products. The association's concerns highlight the complexities of the GST 2.0 revamp and its potential impacts on various sectors of the economy.

According to Sanjay Jain, Chairman of the ICC National Textiles Committee, the use of manmade textiles is expected to increase as a result of the GST changes. The overall picture suggests a dynamic and evolving landscape in the textile industry, with the GST 2.0 revamp playing a crucial role.