CMAI advocates for a uniform GST across entire textile value chain

02 September 2025, Mumbai 

The Clothing Manufacturers Association of India (CMAI) is advocating for a uniform 5 per cent Goods and Services Tax (GST) rate across the entire Indian textile value chain. This proposal aims to simplify the current multi-tiered tax structure, which has created complications and a problem known as the inverted duty structure.

The current GST framework for textiles is complex and varies based on the type of product and its price. Garments priced below Rs 1,000 are taxed at 5 per cent while garments priced above Rs 1,000 are taxed at 12 per cent.

Raw materials like Purified Terephthalic Acid (PTA) and Monoethylene Glycol (MEG) are taxed at 18 per cent, MMF filament and spun yarn are taxed at 12 per cent. Fabrics and garments are taxed at 5 per cent or 12 per cent, depending on the price.

This differential taxation creates an inverted duty structure, where the tax on raw materials (eg: MMF) is higher than the tax on the finished product (garments). This makes it difficult for manufacturers to claim a full Input Tax Credit (ITC), leading to a build-up of tax liability and an increase in working capital costs.

Supporting a uniform 5 per cent GST, CMAI and other industry bodies like the Confederation of Indian Textile Industry (CITI), argue, a lower tax rate would make textiles and garments more affordable for consumers. They believe, a single tax rate would eliminate the confusion and compliance complexities caused by multiple slabs and price thresholds. This would also reduce the risk of under-invoicing and the informal ‘grey; market. A uniform 5 per cent GST would also support higher-priced traditional wear, handloom, and embroidered garments that are currently penalized by the 12 per cent GST rate. Besides, a lower, uniform GST would stimulate demand and help the industry grow. Additionally, it would help attract investments and create more jobs.

The GST Council is currently considering a major restructuring of the tax slabs, and CMAI is hopeful that the textile industry will be placed in the lowest 5 per cent slab to address these long-standing issues.

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