GST Reforms: A Historic Leap for India’s Textile Sector, Targeting $350 Billion Economy by 2030
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New Delhi, Sep 5 (TheTrendingPeople.com): India’s textile sector received a major boost on Thursday as the government rolled out next-generation GST reforms, a move hailed as a transformative step towards making India a $350 billion textile economy by 2030. The Ministry of Textiles emphasized that the reforms would not only rationalize taxes but also address long-standing challenges, ensuring growth across the entire value chain—farm to foreign markets.
A Landmark Announcement
The announcement came after a high-level review chaired by senior officials of the Ministry of Textiles, who reaffirmed the government’s commitment to work closely with exporters, artisans, and entrepreneurs. The reforms were immediately welcomed by industry associations, particularly in states like Gujarat, Tamil Nadu, and West Bengal, which house some of India’s largest textile hubs.
“These reforms are historic. By aligning GST rates and correcting structural anomalies, we are paving the way for affordable fashion for consumers, sustainable jobs for workers, and stronger competitiveness for our industry,” a senior official at the Ministry of Textiles told TheTrendingPeople.com.
What Has Changed Under GST
The GST reforms bring sweeping changes across fibre, yarn, garments, carpets, and handicrafts:
- Fibres and Yarns: GST reduced from 18% to 5% on fibres and from 12% to 5% on yarns. This corrects the inverted duty structure (IDS), long considered a bottleneck for manufacturers.
- Garments: Readymade apparel and made-ups up to ₹2,500 per piece will now attract only 5% GST, expanding the earlier ₹1,000 threshold.
- Carpets and Floor Coverings: GST slashed from 12% to 5%, boosting export clusters like Bhadohi (Uttar Pradesh) and Srinagar (Jammu & Kashmir).
- Handicrafts: Thirty-six items, including cotton rugs and handwoven carpets, now taxed at 5%, easing the burden on artisans and promoting traditional crafts.
In addition, the government announced a simplified refund process and the removal of the ₹1,000 threshold for small consignments via courier or post, which will benefit small exporters and low-risk businesses.
Voices from the Ground
Reactions poured in quickly from industry stakeholders. In Surat, a leading textile exporter, Rakesh Patel, described the reforms as “a relief that will restore our global competitiveness in synthetic textiles.”
Similarly, artisans in Bhadohi, known as the carpet capital of India, expressed optimism. “Weavers here were struggling with high taxes that made exports unviable. This cut will help revive our craft and bring more orders,” said Mushtaq Ahmad, a master carpet weaver.
Women employed in stitching units in Tiruppur, Tamil Nadu, also welcomed the move. “With affordable garments, demand will rise. More demand means more jobs for us,” said Lakshmi, a tailoring worker.
Why This Matters
Boosting Employment
The textile sector is one of India’s largest employers, particularly for women. By making garments more affordable and boosting demand, the reforms are expected to sustain and expand employment in stitching, tailoring, and finishing units.
Supporting Small and Medium Enterprises
A large share of man-made fibre (MMF) production happens in small and medium units. Lower GST rates will ease cost pressures, strengthen cash flows, and make Indian MMF-based garments globally competitive.
Reviving Rural and Tier-2/3 Markets
By reducing the GST on affordable apparel, the reforms are expected to revive demand in rural areas and smaller towns. This could translate into stronger domestic consumption, complementing export growth.
Preserving India’s Craft Heritage
The reduction in GST on carpets, handicrafts, and handwoven items not only supports rural artisans but also strengthens India’s position in global niche markets that value traditional craftsmanship.
Alignment with the 5F Formula
The reforms are in line with Prime Minister Narendra Modi’s visionary 5F formula—Farm to Fibre to Factory to Fashion to Foreign. By rationalizing costs and boosting competitiveness, the policy aims to place India as a global textile powerhouse.
Industry analysts highlight that this alignment will promote a fibre-neutral policy, balancing the growth of cotton and man-made segments, which have historically seen uneven development.
Historical Context
The textile sector has often struggled with a complex tax structure that created distortions. The inverted duty structure—where raw materials were taxed higher than finished goods—added to working capital burdens. For years, industry players demanded rationalization to ensure a level playing field.
Thursday’s announcement, therefore, marks not just a tax reform but the resolution of a long-standing demand. Analysts believe this could be one of the most significant policy moves in recent decades for the textile industry.
A Step Towards $350 Billion Target
With India already one of the world’s top textile exporters, the reforms are expected to push the country towards its ambitious goal of becoming a $350 billion textile economy by 2030. The push for affordability, competitiveness, and export growth is seen as crucial in achieving this milestone.
Industry body Confederation of Indian Textile Industry (CITI) projected that exports could see double-digit growth in the coming years, while domestic consumption is likely to rise sharply in semi-urban and rural markets.
Final Thoughts from TheTrendingPeople.com
The government’s next-generation GST reforms are more than just fiscal adjustments; they are a strategic intervention to strengthen one of India’s oldest and most significant industries. By correcting distortions, empowering artisans, reviving demand, and ensuring affordability, these reforms could be the game-changer that positions India as a true global textile powerhouse by 2030.
For millions employed in the sector—from cotton farmers to garment workers—the reforms represent hope and opportunity. As India stitches together its path from farm to foreign markets, the textile industry could well become the fabric of the country’s economic resurgence.