India textile tax policy is under review as the government works on an integrated framework intended to ease duty costs on raw materials and machinery. The measures remain under discussion, with no implementation date confirmed.

Key Takeaways

  • The review could cover goods and services tax, basic customs duties and anti-dumping duties.
  • The textiles ministry and industry representatives have requested relief on a range of inputs used by manufacturers.
  • Temporary duty exemptions on two polyester-chain inputs were withdrawn in July 2026.

India textile tax review spans the supply chain

The proposed framework could cover goods and services tax on textile products and inputs, customs duties on raw materials and imported machinery, and anti-dumping duties on selected man-made fibre and yarn imports.

The Department of Revenue is working with the textiles ministry and examining requests from industry representatives. The aim is to address costs across production, from fibre and yarn to fabric and finished goods, while giving manufacturers greater tax certainty.

No changes to those duties have been confirmed under the framework. The review is separate from the ₹40,000-crore Textile Expansion and Employment Scheme, announced in the 2026–27 budget, which the government has been preparing to implement.

Duty requests focus on inputs and machinery

The textiles ministry has asked the Department of Revenue to remove customs duties on caprolactam, nylon chips, rayon-grade wood pulp and cotton. It has also recommended removing or deferring anti-dumping duties on elastomeric filament yarn and viscose rayon filament yarn, citing effects on downstream manufacturers, smaller businesses and employment.

Separately, industry representatives have sought a six-month basic customs duty waiver on monoethylene glycol (MEG), purified terephthalic acid (PTA), partially oriented yarn, fully drawn yarn and drawn textured yarn. Temporary exemptions on MEG and PTA were withdrawn in July 2026.

The ministry has also asked the department to review machinery costs. Industry representatives have argued that investment support alone may not be enough if manufacturers continue to face high or uneven duties on inputs and equipment.

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