Central government urged to address structural issues in man-made fibres sector

The Central government should address the inverted GST duty structure in man-made fibres (MMF) that is persisting even after GST rationalisation last year. PTA and MEG, the two principal raw materials for polyester, attract 18% GST, while finished fibre and filament products are taxed at 5%. This inversion has led to systemic working-capital blockage, said R.K. Vij, national president of the Textile Association India.

For an investor in MMF, unused input tax credit can amount to ₹200 crore for a new plant of 1,000 tonnes a day project. New investment in MMF is a must to meet the fibre and filament demand by 2030. Indian exporters continue to face higher compliance and transaction costs compared with peer countries.

Next financial year has the potential to be a turning point for the Indian textile and apparel sector provided such structural issues are addressed, he said.

India is increasingly recognised as a reliable and scalable sourcing destination for textiles and apparel. Buyer delegations are actively visiting textile clusters across Coimbatore, Tiruppur, Surat, Ahmedabad, and the Delhi–NCR region—finalising samples, sharing designs, and entering into long-term sourcing arrangements.

The Free Trade Agreements between India and the UK and India and European Union and the negotiations with the U.S. will strengthen export prospects.

Investments are now flowing into technical and performance textiles that have high entry barriers, stringent compliance requirements, and longer buyer commitments, historically dominated by imports. Domestic capacity creation in these categories marks a meaningful shift up the value chain.

Globally, man-made fibres account for nearly 70% of total fibre consumption, while India remains at around 50%. India’s long-term textile trade potential of $ 350 billion by 2030–2031 from the current level of around $ 175 billion is achievable provided there is policy stability, timely correction of structural issues, and continued industry–government collaboration, he said.