Government’s think-tank NITI Aayog is looking into tax anomalies in the textile sector. It had last week convened a meeting of sector related industry bodies to understand the challenges being faced by the sector.
“NITI Aayog has sought views of the textile industry on tax related matters that are impeding the growth of the sector,” a senior government official said, adding that the Aayog will firm up its view and make suitable recommendations to the finance ministry for consideration.
Some of the issues raised by the industry, at the recently held stakeholder consultation, included the import duty on cotton and textile machinery and the inverted duty structure in manmade fibre textile value chain.
Industry has sought removal of 11% import duty on cotton as a steep rise in cotton prices has eroded the competitiveness of the Indian textile industry.
“Issues related to increasing the customs
duty on manmade yarn to 10% from the existing 5% to check rising imports along with higher imports of apparel from Bangladesh and Sri Lanka were discussed,” said another official.
Exempting job works in the MSME sector from the goods and services tax (GST), and reducing GST on airfares were the other issues. Industry said that higher GST is making airfare uncompetitive.
“This needs to be corrected amid demand slowdown in our major markets and demand is not expected to pickup before September,” said one industry representative.
India’s exports of cotton yarn, made-ups, handloom products, manmade yarn and fabric, and ready made garments of all textiles were around $7.8 billion in April-June 2023-24, 14.5% lower than $9 billion in the corresponding period a year ago.
Officials from Invest India also participated in the meeting where issues related to import duty on cotton and textile machinery, and the inverted duty structure in manmade fibre textile value chain, were raised.
India’s total textile and apparel export was around $36 billion in FY23 and the target is to achieve $100 billion in the next 5-6 years, taking the combined value of the sector along with domestic consumption to $250 billion.
Industry emphasised that there should be no change in any tax-related policy during the financial year and policies should be maintained for the entire fiscal.
Market research firm IMARC Group has pegged India’s textile and apparel market to reach $387.3 billion by 2028.