With the onset of embargo-like tariffs imposed by the United States from today—among the highest in the region—India’s textile sector faces a formidable challenge in maintaining its global competitiveness. In response, the Northern India Textile Mills Association (NITMA) has urged the GST Council to implement a uniform 5% Goods and Services Tax (GST) rate on key inputs in the man-made fiber (MMF) value chain.
Fashion Guru
Speaking ahead of the upcoming GST Council deliberations scheduled for September 3–4, 2025, NITMA President Sidharth Khanna emphasized the urgent need to eliminate the inverted duty structure currently affecting the MMF segment. He called for a rationalized GST rate of 5% on the following items:
Polyester Staple Fiber (Virgin & Recycled) – HSN 55032000
Polyester Spun Yarn – HSN 55092100 & 55092200.
Join our group
GST rate on PSY must be reduced from 12% to 5% (to align with fabric which is already taxed at 5%), and PSF from 18% to 5% as otherwise the inverted duty anomaly will become unworkable for the spinning industry.
He highlighted that if yarn is taxed at 5% & fibre at 18%, then the following burdens will fall on the industry:
Huge Blockage of working capital in GST refunds.
Administrative hurdles and Inspector Raj issues during refund claims.
Higher cost of fresh investment as input tax credit of 18% on capital goods remains unutilized.
Loss of SGST incentives offered by state governments.
Unfair competition from imported finished goods that bypass these inefficiencies.
Join our community
Khanna concluded with a strong appeal to the GST Council:
“This is a critical moment for India’s textile sector. Decisive action to remove the inverted duty structure will not only counteract the impact of U.S. tariffs but also unlock growth and investment across the MMF value chain, thereby ultimately making this event a blessing in disguise.”
CREDITS: NITMA press release unedited by us.
CONTACT US 
