In a strategic move to bolster its textile industry, India is setting its sights on 40 new countries for export opportunities, following the United States' imposition of a 50% tariff on Indian goods. This development marks a significant shift in India's textile export strategy, as the sector grapples with potential market disruptions.

Exploring New Horizons

Union Minister Giriraj Singh revealed that the 40 countries under consideration represent a substantial market, with nearly $600 billion in textile and apparel imports. This initiative demonstrates India's proactive approach to diversifying its export destinations and mitigating the impact of the US tariffs.

Leveraging Free Trade Agreements

To facilitate this expansion, India plans to capitalize on its free trade agreements with 15 countries. These agreements are expected to play a crucial role in boosting textile exports, potentially opening up new avenues for Indian manufacturers and exporters.

Impact of US Tariffs

The 50% tariff imposed by the United States affects Indian exports worth more than ₹4 lakh crore ($48 billion) across multiple sectors. Besides textiles, other affected industries include:

• Gems and jewelry
• Shrimp
• Leather
• Chemicals
• Machinery

This wide-ranging impact underscores the importance of India's efforts to diversify its export markets.

India's Textile Sector: A Snapshot

India's textile and apparel sector is a significant contributor to the national economy:

Maintaining Employment Stability

Despite the challenges posed by the US tariffs, Minister Singh has assured that there will be no job losses in the textiles sector. This commitment is particularly significant given that the textile industry is India's second-largest employer after agriculture.

Global Context

The global textile trade is valued at approximately ₹66.70 lakh crore ($800.77 billion), with India holding a 4.10% share. As the sixth-largest exporter globally, India's push to explore new markets could potentially increase its global market share and offset any losses from the US tariff imposition.

India's strategic pivot towards new export destinations showcases the country's resilience and adaptability in the face of international trade challenges. By leveraging existing trade agreements and exploring untapped markets, India aims to maintain the growth trajectory of its vital textile sector while safeguarding employment in this crucial industry.

Finance Minister Addresses Inverted Duty Structure

India's textile sector is poised for a significant transformation as the Finance Minister announces a uniform 5% Goods and Services Tax (GST) rate across the entire man-made textile value chain. This pivotal change, set to take effect from September 22, 2025, aims to rectify the long-standing issue of inverted duty structure that has been hampering the industry's growth and competitiveness.

The New GST Structure

The revised tax structure brings a uniform 5% GST rate to all segments of the man-made textile value chain, including:

• Man-made fibres
• Yarn
• Fabrics

This move aligns the tax rates on fibres and yarn with the existing 5% rate on fabrics, effectively eliminating the inverted duty structure that has been a point of contention in the industry.

Historical Context

The government's decision comes after a previous attempt to implement a uniform 12% GST rate across the sector. However, that initiative was rolled back following protests from Micro, Small, and Medium Enterprises (MSMEs) and traders. The new 5% rate represents a more balanced approach, addressing both industry concerns and the need for structural reform.

Expected Benefits

The implementation of the uniform 5% GST rate is anticipated to bring several advantages to the textile sector:

1. Cost Pressure Reduction: By lowering the GST on fibres and yarn from higher rates to 5%, manufacturers are expected to see a decrease in input costs.
2. Working Capital Release: The alignment of tax rates will help unlock working capital that was previously tied up due to the inverted tax structure.
3. Enhanced Competitiveness: Domestic manufacturers are likely to become more competitive in both local and global markets due to the simplified tax structure and reduced costs.

Industry Impact

The textile industry, particularly the man-made fibre segment, is expected to see positive effects from this tax reform. Companies that are likely to benefit from this change include:

• KPR Mill
• Alok Industries
• Vardhman Textiles
• Garware Technical
• Ganesha Ecosphere
• Welspun Living
• Siyaram Silk
• Trident
• Arvind Ltd
• Raymond

These firms, representing various segments of the textile value chain, are positioned to leverage the new tax structure to improve their operational efficiency and market competitiveness.

Looking Ahead

As the implementation date approaches, the textile industry will be keenly watching how this change unfolds. The uniform GST rate is expected to simplify compliance, reduce tax-related complexities, and potentially spur growth in the man-made textile sector.

The government's move demonstrates a commitment to addressing structural issues in the textile industry, which is crucial for the sector's long-term growth and its ability to compete in the global market. As the industry adapts to this change, it may lead to increased investments, job creation, and overall economic growth in the textile sector.