During the recent stakeholder consultation, the industry raised several issues, including the import duty on cotton and textile machinery and the inverted duty structure in the manmade fibre textile value chain.
NITI Aayog, was investigating tax anomalies in the textile sector. The previous week, the Aayog had organised a meeting with industry bodies related to the sector to comprehend the challenges faced by it.
NITI Aayog had requested the textile industry’s viewpoints on tax-related issues that were hindering the sector’s growth. The official added that the Aayog would consolidate its stance and make suitable recommendations to the finance ministry for their consideration.
During the recent stakeholder consultation, the industry raised several issues, including the import duty on cotton and textile machinery and the inverted duty structure in the manmade fibre textile value chain.
The industry urged for the removal of the 11 per cent import duty on cotton due to a significant increase in cotton prices, which had negatively impacted the competitiveness of the Indian textile industry.
Another official mentioned that they discussed increasing the customs duty on manmade yarn from 5 per cent to 10 per cent to curb rising imports, as well as addressing the higher imports of apparel from Bangladesh and Sri Lanka.
The industry also sought exemptions for job works in the MSME sector from the goods and services tax (GST) and reducing GST on airfares, as they believed that the higher GST was making airfares less competitive.
One industry representative highlighted the need for corrective actions in the midst of a demand slowdown in major markets, expecting demand to pick up only after September.
In the period of April-June 2023-24, India’s exports of various textile products, including cotton yarn, made-ups, handloom products, manmade yarn and fabric, and ready-made garments, amounted to around $ 7.8 billion, showing a decline of 14.5 per cent compared to the corresponding period in the previous year, which recorded exports worth $ 9 billion.
Invest India officials also participated in the meeting and raised concerns about import duty on cotton and textile machinery, as well as the inverted duty structure in the manmade fibre textile value chain.
India’s overall textile and apparel exports in FY23 were approximately $ 36 billion, and the target was set to achieve $ 100 billion in the next 5-6 years, aiming for a combined value of the sector, including domestic consumption, to reach $ 250 billion.
The industry strongly emphasised that tax-related policies should remain unchanged throughout the financial year and should not be altered mid-year.
Market research firm IMARC Group projected that India’s textile and apparel market would reach $ 387.3 billion by 2028.