New Delhi : According to an official statement issued on Thursday, the rationalization of the Goods and Services Tax (GST) under GST 2.0 is a significant reform aimed at addressing structural anomalies, reducing costs, and boosting demand in the textile and logistics industries. Both of these are crucial for domestic growth, employment, and export competitiveness.
By uniforming tax rates across the value chain, the GST reform ensures affordability for consumers, sustains employment in labor-intensive sectors, and enhances India's ability to compete globally. The statement states that in the textile sector, this rationalization strengthens the entire value chain—from fiber to apparel—by reducing distortions, improving apparel affordability, reviving retail demand, and boosting export competitiveness.
The reduction in GST will make apparel more affordable for middle- and lower-income families, boosting domestic demand and having a significant impact in smaller towns and rural areas.
The GST on readymade garments up to ₹2,500 is now 5%, making apparel more affordable and boosting domestic demand.
Reducing the GST on man-made fibers and yarns from 12% and 18% to 5% removes the inverted duty structure and strengthens small and medium enterprises, while reducing the GST on carpets and other textile floor coverings from 12% to 5% will enhance global competitiveness, the statement said.
Similarly, reducing the GST on commercial goods vehicles from 28% to 18% will reduce logistics costs and boost exports.
GST reforms also extend to the transportation sector, which plays a key role in reducing logistics costs and promoting industrial growth. Trucks and delivery vans, which carry approximately 65-70% of India's freight traffic, benefit significantly from the tax rationalization. Cheaper freight transportation – Lower costs per tonne-km benefit the transportation of textiles, FMCG, and e-commerce deliveries.
The cascading effect of lower logistics costs helps mitigate overall price pressures and reduce inflation. Furthermore, lower logistics costs make the Indian textile industry more competitive abroad.
Rationalizing GST in the textile and logistics sectors is a decisive step towards strengthening India's manufacturing base, improving affordability, and boosting exports. By reducing structural imbalances and easing cost pressures, these reforms benefit consumers, small businesses, and exporters alike. The statement further stated that these reforms reinforce the vision of a globally competitive India, driven by resilient supply chains and a thriving textile sector.
