In order to encourage investment in the textiles sector, the inverted tariff structure must be corrected: Minister of Finance
24 February 2022, Mumbai:
Correction of the inverted tariff structure in the textiles value chain, according to Finance Minister Nirmala Sitharaman, is critical to attracting investment in the sector.
The Minister told industry and trade leaders at a post-Budget conference in Mumbai that the production-linked incentive system for the sector needs to be corrected, or else investments will not come to specific regions.
Her comment is timely given that the Goods and Services Tax (GST) Council had to abandon a proposal to raise GST rates for most textile items in the man-made fiber (MMF) value chain from 5% to 12% in late December 2021 due to industry concerns; the Government, however, may reconsider the idea shortly.
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Correction of the inverted tariff structure in the textiles value chain, according to Finance Minister Nirmala Sitharaman, is critical to attracting investment in the sector.
The Minister told industry and trade leaders at a post-Budget conference in Mumbai that the production-linked incentive system for the sector needs to be corrected, or else investments will not come to specific regions.
Her comment is timely given that the Goods and Services Tax (GST) Council had to abandon a proposal to raise GST rates for most textile items in the man-made fiber (MMF) value chain from 5% to 12% in late December 2021 due to industry concerns; the Government, however, may reconsider the idea shortly.
MMF, yarn, and textiles are now taxed at 18%, 12%, and 5%, respectively. GST rates for mono-ethylene glycol (MEG) and pure terephthalic acid (PTA) are 18% and 12%, respectively, for polyester partly oriented yarn (POY) and 5% for grey textiles, completed fabrics, and garments.
Cotton, silk, and wool are natural fibers that fall under the 5% category.
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*Figures mentioned in the above article have been sourced from Financial Express & Apparel Resources article.
