Indian MMF Textile Industry Urges GST Reduction to Remove Inverted Duty

Surat | Gujarat — An online meeting led by the Southern Gujarat Chamber of Commerce and Industry (SGCCI) was held in Surat with all the MMF textile associations across India regarding the GST rates. 

Representatives of the Confederation of Indian Textiles, SAIMA, Southern India Mills Association, Metaxil SRTEPC, Nylon Spinners Association, New Delhi Textile Association, Association of Synthetic Fiber Industry, Polyester Textile Apparel Industry Association, Pedexil and PTA User Associations participated in the meeting..

Representatives expressed their fear regarding the recently held 56th GST Council meeting stating that all the synthetic yarn spinners in India have come under inverted duty due to the 18% GST rate on the raw material of yarn remaining unchanged, a large amount of ITC credit refund of these industrialists will be deposited with the government.

When most of the spinners were planning to expand, such a large amount will be deposited with the government in input tax credit, due to which the tax levied on the machinery will not be recovered for life, due to which India’s MMF textile production will not be competitive at the global level, and all the spinners in India will suffer losses. As per the calculation, a GST credit of about Rs. 9 per kg will be deposited.

In the meeting, the MMF textile associations were unanimous that due to the recent changes in GST rates made by the Central Government, inverted duty has been removed at the fabric level, but a very large amount of inverted duty has come at the yarn level, hence the GST rate on the first raw material of textiles, paraxylene, caprolactam, MEG, PTA and nylon and polyester chips, needs to be reduced from 18 percent to 5 percent. There should be no inverted duty anywhere in the entire MMF textile value chain. When the inverted duty is abolished  from the entire value chain, India’s textile industry will become globally competitive.

To achieve the target of textile exports of 350 billion US dollars from India by the year 2030, an investment of about 24,000 crores is required in the polyester yarn sector in the next five years. While there is a need for investment of about 40000 crores in the production sector of MEG, PTA. 

If the government does not remove the inverted duty, it will have a very serious impact on this investment. Currently, a 50 percent tariff has been imposed on India by the US, and many manufacturers’ yarn will stop exporting to  the US. If yarn manufacturers in the domestic sector lose competitiveness, then the import of textile products will increase.

The Central Government has organized a meeting for the textile sector in the Revenue Department in New Delhi on September 12, 2025. In this meeting, the presidents of associations across India will meet the officers of the Tax Research Unit and present the above matter. This entire demand is from the textile industrialists across India.

In the online meeting, textile association representatives opposed the 18 percent GST rate on garments above Rs 2500. The 18 percent GST rate on garments will be very expensive for the consumers, hence a proposal to reduce the 18 percent GST rate on garments to 5 percent will also be made by the textile industrialists in the meeting to be held in New Delhi on September 12th.