The Northern India Textile Mills Association (NITMA) respectfully submitted this urgent representation to the Hon’ble Union Finance Minister and esteemed members of the GST Council, ahead of the Council’s deliberations scheduled for September 3–4, 2025.
Sidharth Khanna , President- NITMA opened by highlighting that the long standing issue of Inverted Duty Structure (IDS) affecting the Man-Made Fibre (MMF) textile value chain remains unaddressed. Unlike the cotton value chain—which benefits from a uniform 5% GST across all stages—the MMF segment continues to suffer from disparate tax rates that distort input-output parity and undermine domestic manufacturing viability.
Under the current GST framework:
Polyester Staple Fiber (Virgin & Recycled) – HSN 55032000 is taxed at 18%
Polyester Spun Yarn – HSN 55092100 & 55092200 is taxed at 12%
MMF Fabrics and Garments (< ₹1,000) are taxed at 5%
In view of the above, 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
Proposed rates submitted , are as follows:
Products in MMF Value Chain HSN Current GST rate Proposed GST rate
PSF - Polyester Staple Fiber 55032000 18% 5%
PSY - Polyester Spun Yarn 55092100 & 55092200 12% 5%
MMF Fabrics 5% 5%
MMF Garments < Rs.1,000/- 5% 5%.
He further emphasized that the=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.
Khanna also outlined about the existential threat to the MMF industry i.e. taxing yarn at 5% while fibre remains at 18%—a distortion that makes spinning operations financially unsustainable. If left uncorrected, this imbalance could trigger widespread unit shutdowns and large-scale job losses across the country.
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The above-cited threat is due to following concerns :
5–6% of annual turnover blocked in GST refunds
High interest costs on locked capital
Complex refund procedures and regulatory burdens
New capital investments becomes costlier by 18%
Refer
Imported yarns gaining unfair advantage, undermining “Make in India”
In view of all of the above, he humbly appealed the GST Council to act decisively:
“This is a defining moment for India’s textile sector. Correcting the inverted duty structure will not only neutralize the impact of U.S. tariffs but also unlock growth, investment, and resilience across the MMF value chain—turning challenge into opportunity.”
CREDITS: This information was compiled from NITMA press release and has not been edited or reviewed by our team.
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