GST Reform Catalyzes India's Textile Industry Expansion

The GST rate rationalisation in India's textile sector aims to reduce costs, bolster exports, and sustain jobs. These reforms, including reduced rates for fibres, yarns, and garments, are set to lower costs, enhance competitiveness, and contribute towards the USD 350 billion market target by 2030.

The Indian government has announced a rationalisation of the Goods and Services Tax (GST) rates for the textile sector, projecting a boost to exports and domestic market growth. The initiative seeks to reduce production costs and support job creation as the industry aspires to reach a USD 350 billion target by 2030.

A key aspect of the reform includes setting a 5 percent GST rate for readymade garments priced up to Rs 2,500 per piece, down from the previous Rs 1,000 threshold. This adjustment is poised to make affordable apparel more accessible, particularly benefiting middle-class and low-income households.

Significantly, the GST rate for fibres and yarns has been slashed from 18 percent and 12 percent to a uniform 5 percent, addressing the inverted duty structure. This change alleviates cost pressures and enhances cash flow in small and medium production units, positioning India as a competitive hub for synthetic textiles globally.