India’s latest Goods and Services Tax (GST) reform has brought relief to the apparel sector. However, it has also raised concerns across the man-made fibre (MMF) value chain, especially the polyester segment.
The GST changes aim to support the mass-market clothing segment by reducing taxes on everyday apparel. At the same time, premium garments face higher taxation.
Polyester Value Chain Faces a Tax Challenge
For the textile industry, the key issue is the tax structure for polyester feedstock, fibre and yarn. The reform has addressed the long-standing inverted duty structure on man-made fibre and yarn. However, a tax gap remains at the polyester feedstock stage.
In some areas, this gap has also widened. This could create additional pressure for polyester manufacturers, textile producers and exporters.
Impact on Textile Manufacturers
The unresolved GST gap may affect production costs and working capital. It could also influence the global competitiveness of India’s synthetic textile sector.
Polyester plays a major role in India’s MMF industry. Therefore, a balanced tax structure is important for the entire value chain.
Industry stakeholders may now seek further changes to reduce tax-related pressure. A more consistent GST structure could help improve efficiency and support the growth of India’s MMF and textile exports.
The issue highlights the need for tax policies that support the full textile value chain, from raw materials to finished garments.
