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Corporate Update

GST Council Lowers Rates On Key Textile Inputs, Boosts Industry Outlook

• By  Textile Excellence
• September 04, 2025

The 56th meeting of the GST Council, chaired by Finance Minister Nirmala Sitharaman on September 3, 2025, announced sweeping changes in tax rates, including major relief for the textile value chain. The Council approved a reduction of GST on critical raw materials such as synthetic filament yarns, staple fibres, sewing threads, and manmade fibre waste from 12-18% to 5%.

The move is expected to ease the long-standing inverted duty structure that has burdened spinners, weavers, and garment exporters. High input taxes coupled with lower output rates had blocked working capital and eroded competitiveness. The Council also approved a revised mechanism for 90% provisional refunds on inverted duty cases, backed by data-driven risk evaluation.

Industry stakeholders see this as a structural correction that will directly reduce costs across the polyester and viscose value chain, which together account for over 65% of India’s manmade fibre consumption. The relief is likely to benefit clusters in Surat, Bhilwara, Bhiwandi, and Ludhiana, where synthetic textiles dominate production.

Exporters, already grappling with subdued demand from the US and EU, believe the rationalisation will sharpen India’s edge against Vietnam, Bangladesh, and Indonesia, which enjoy favourable duty-free market access. Analysts estimate that fabric prices could soften by 3–5%, improving India’s share in global MMF apparel trade, currently less than 5%. Rajeev Gupta, Joint Managing Director, RSWM Limited has expressed his view on this new move from the Finance Ministry: "We welcome the Government’s forward-looking GST reform, which will have a far-reaching impact on India’s economic growth by improving affordability, reducing working capital requirements, and boosting demand across industries. For the textile sector, this is a particularly transformative step. The reduction of GST on manmade fibre from 18% to 5% and on synthetic yarn from 12% to 5% will significantly strengthen the domestic textile industry, enhance competitiveness, and stimulate consumption. The revision of the apparel slab, raising the limit from ₹1,000 to ₹2,500, will provide a powerful boost to garments and apparel demand, thereby creating new opportunities across the textile value chain. At the same time, we believe that harmonizing GST on recycled polyester fiber and its raw material, PET bottles (18%), is an important area that needs attention to unlock the full potential of circular textiles. We remain committed to driving sustainable innovation, scaling domestic production, and contributing to India’s journey towards Viksit Bharat @2047".

The Council further decided to operationalise the Goods and Services Tax Appellate Tribunal (GSTAT) by December 2025, strengthening the dispute resolution framework and enhancing business confidence. Industry bodies have welcomed the measures as timely, though they await clarity on the date of full implementation. The phased rollout of rate cuts is scheduled to begin September 22, 2025.

Rajeev Gupta, Joint Managing Director, RSWM Limited expressed his view on this new move from the Finance Ministry: "We welcome the Government’s forward-looking GST reform, which will have a far-reaching impact on India’s economic growth by improving affordability, reducing working capital requirements, and boosting demand across industries. For the textile sector, this is a particularly transformative step. The reduction of GST on manmade fibre from 18% to 5% and on synthetic yarn from 12% to 5% will significantly strengthen the domestic textile industry, enhance competitiveness, and stimulate consumption. The revision of the apparel slab, raising the limit from ₹1,000 to ₹2,500, will provide a powerful boost to garments and apparel demand, thereby creating new opportunities across the textile value chain. At the same time, we believe that harmonizing GST on recycled polyester fiber and its raw material, PET bottles (18%), is an important area that needs attention to unlock the full potential of circular textiles. We remain committed to driving sustainable innovation, scaling domestic production, and contributing to India’s journey towards Viksit Bharat @2047".