Will GST Reforms Propel the Textiles Sector to $350 Billion by 2030?
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Synopsis
The Indian government's next-generation GST reforms are set to revolutionize the textile industry, aiming for a $350 billion market by 2030. These changes promise to lower costs, boost employment, and enhance global competitiveness, benefiting artisans and consumers alike. Discover how these reforms will reshape India's textile landscape.
Key Takeaways
- Next-generation GST reforms are a leap for India's textile sector.
- Goal to reach a $350 billion textile economy by 2030.
- Reduced GST rates will lower production costs significantly.
- Focus on job preservation and expansion, especially for women.
- Support for artisans enhances rural livelihoods and craft traditions.
New Delhi, Sep 5 (NationPress) The upcoming GST reforms represent a monumental advancement for India's textile industry, acting as a key driver for the nation's goal of becoming a $350 billion textile economy by 2030, as stated by the government.
The Ministry of Textiles has reiterated its dedication to collaborating closely with industry stakeholders, exporters, artisans, and entrepreneurs to implement these reforms effectively.
These groundbreaking reforms are anticipated to lower costs, eliminate structural issues, preserve jobs, and strengthen the entire textile value chain—from fibre to fashion to foreign markets.
The reforms are fully in line with the Prime Minister’s visionary 5F formula (Farm to Fibre to Factory to Fashion to Foreign), which aims to establish India as a global textile powerhouse.
The rationalization of GST in textiles is set to eliminate distortions, reduce production costs, boost demand, support exports, and enhance India’s competitiveness on the global stage.
These reforms address anomalies at the fibre stage, lower costs at the yarn and fabric stages, enhance garment affordability, revive demand at the retail level, and improve export competitiveness. Crucially, these measures provide a significant boost to India’s fibre-neutral policy, ensuring equitable growth across cotton and man-made segments.
The 5% GST rate for items of readymade garments and made ups, now applicable up to Rs 2,500 per piece (previously Rs 1,000), makes affordable apparel more accessible, especially for middle-class and low-income households.
This is expected to stimulate demand in tier 2 and 3 towns and rural areas.
“Considering the labour-intensive nature of garment-making, increased demand will sustain and expand employment, particularly for women involved in stitching, tailoring, and finishing units. This initiative will also bolster ‘Make in India’ brands, enabling them to compete with inexpensive imports in the low and mid-price brackets,” the ministry stated.
The GST has been cut from 18% to 5% on fibres and from 12% to 5% on yarns.
This adjustment rectifies the inverted duty structure (IDS), aligns fibre–yarn–fabric rates, and alleviates long-standing working capital pressures on manufacturers.
Given that a significant portion of Man-made fibres (MMF) production occurs in small and medium enterprises, the reduction alleviates cost pressures, strengthens cash flows, and makes Indian MMF-based garments more competitively priced globally—supporting India’s aspiration to become a hub for synthetic textiles and MMF garments.
For carpets and floor coverings, the GST has been decreased from 12% to 5%. This will enhance exports from clusters like Bhadohi and Srinagar, fortifying traditional crafts and improving affordability in domestic markets.
The tax has also decreased from 12% to 5% on 36 handicraft items, cotton rugs from handlooms, and handwoven carpets under HS 5705. This initiative will provide relief to artisans, uplift rural livelihoods, and promote India’s rich craft traditions.
The simplification of the refund process concerning both zero-rated supply and inverted duty structure is based on a system-driven risk evaluation.
Furthermore, the elimination of the Rs 1,000 threshold for small consignments transported via courier/postal services is a very positive step, along with a simplified GST Registration Scheme for small and low-risk enterprises.
Point of View
It is vital to acknowledge that these GST reforms present a significant opportunity for India's textile industry. By aligning with global standards and focusing on sustainability, the government is paving the way for balanced growth and competitiveness. The commitment to support artisans and traditional crafts will ensure that India retains its cultural heritage while advancing economically.
NationPress
05/09/2025
Frequently Asked Questions
What are the key benefits of the new GST reforms for the textile sector?
The key benefits include reduced costs, elimination of structural anomalies, job preservation, and a strengthened textile value chain, ultimately enhancing global competitiveness.
How will the GST reforms impact employment in the textile industry?
The reforms are expected to increase demand, which will sustain and expand employment opportunities, particularly for women involved in garment-making.
What is the significance of the 5F formula in these reforms?
The 5F formula (Farm to Fibre to Factory to Fashion to Foreign) is a strategy aimed at positioning India as a global textile leader, ensuring growth at every stage of the textile value chain.
How do the reforms affect artisans and traditional crafts?
The reforms provide relief to artisans through reduced taxes on handicrafts, supporting their livelihoods and promoting India's rich craft traditions.
What changes have been made to GST rates on textiles?
GST rates have been reduced significantly, with fibres dropping from 18% to 5%, yarns from 12% to 5%, and readymade garments from 12% to 5% for items priced up to Rs 2,500.
