How Will India's Downstream Textile Sector Benefit from QCO Revocation Amid US Tariffs?
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Synopsis
The government's revocation of the Quality Control Order (QCO) on polymer and fiber intermediates will significantly lower costs for India's readymade garment sector, alleviating the impact of US tariffs. This vital change is expected to enhance competition and benefit export-oriented units, particularly in the face of high tariffs.
Key Takeaways
- Revocation of QCO lowers raw material costs.
- Improves competitiveness for readymade garments.
- Benefits export-oriented textile units.
- Enhances supply of affordable imported yarn.
- Revenue growth for polyester yarn makers expected at 3-5 percent.
New Delhi, Nov 20 (NationPress) The government's recent move to revoke the Quality Control Order (QCO) on various polymer and fiber intermediates is set to significantly lower raw-material expenses for the readymade garments industry, according to a Thursday report.
This initiative will provide relief to segments of the downstream textiles market impacted by tariffs, particularly benefiting the readymade garments sector by allowing access to more competitively priced raw material imports, as indicated by Crisil Ratings.
According to the rating agency's evaluation of 20 polyester yarn manufacturers, which together account for 40-45 percent of the sector's revenue, this change is expected to intensify competition among upstream polyester yarn producers.
The Ministry of Chemicals and Fertilisers officially withdrew the QCO on November 12, 2025, thereby eliminating the requirement for mandatory BIS certification for imported yarn.
This certification had been enforced in October 2023 to limit cheaper polyester imports from China.
Gautam Shahi, Director at Crisil Ratings, commented, “Given that polyester yarn serves as a more affordable alternative to cotton yarn, it is widely utilized in the production of value and mid-premium garments. The elimination of the QCO should grant the downstream textile sector a much-needed reprieve, particularly as it has faced challenges due to high export tariffs to the US.”
This decision is anticipated to broaden the supply of affordable imported yarn, offering support to garment and home-textile units focused on exports, especially as they deal with a substantial 50 percent tariff on shipments to the United States, the report noted.
It is essential to highlight that the readymade garment sector earns approximately 25-30 percent of its revenue from exports, with a significant portion directed towards the US, making it the most likely beneficiary, while home textiles—more reliant on cotton—will experience limited advantages.
Crisil further noted that due to the competition from imported yarn and decreased crude oil prices, revenue growth for polyester yarn manufacturers is likely to remain stagnant at 3-5 percent in the upcoming fiscal year, despite a potential increase in volume resulting from the lowered GST rate.
Point of View
I believe that this strategic decision by the government will have a profound positive impact on the downstream textile sector. It showcases the government's commitment to fostering a more competitive environment, particularly in the face of international challenges. This move will not only help exporters but also strengthen the overall textile industry in India.
NationPress
20/11/2025
Frequently Asked Questions
What is the Quality Control Order (QCO)?
The Quality Control Order (QCO) is a regulation that mandates specific quality standards and certifications for certain products, in this case, polymer and fiber intermediates used in the textile industry.
How does the QCO revocation affect the readymade garments sector?
The revocation of the QCO will reduce raw material costs and enhance competitiveness in the readymade garments sector, allowing for better pricing on imported yarn.
What are the implications of high tariffs on US exports?
High tariffs on exports to the US create financial strain on exporters, making it essential for the industry to find cost-effective solutions for raw materials to maintain profitability.
Who benefits the most from this decision?
The readymade garment segment stands to benefit the most, as it relies significantly on exports, especially to the US market.
What is the expected revenue growth for polyester yarn manufacturers?
Crisil estimates that the revenue growth for polyester yarn manufacturers will remain flat at 3-5 percent in the next fiscal year due to competition from imported yarn and lower crude oil prices.
