GST Rate for Textile Industry

The Indian textile sector, a cornerstone of our economy that employs millions and ships products worldwide, is getting a significant makeover. Following the recent GST Council meeting, the tax rates on everything from yarn to your favorite branded shirt have been adjusted. These changes aren't just numbers on a spreadsheet; they will affect what you pay for clothes and home goods and how small and large textile businesses operate.

So, what’s changing? In short, many essential textile materials just got cheaper to produce, with GST rates dropping from 12% or 18% down to 5%. However, if you have an eye for high-end fashion, be prepared for a price bump, as premium apparel (items over ₹2,500) will now be taxed at 18% instead of 12%.

Let's unpack what these new rates mean for everyone, from the factory floor to the shopping mall.

(12% to 5%)

S. No.	Chapter / Heading / Sub-heading / Tariff item	Description of Goods
1.	5401	Sewing thread of manmade filaments, whether or not put up for retail sale
2.	5402, 5403, 5404, 5405, 5406	Synthetic or artificial filament yarns
3.	5508	Sewing thread of manmade staple fibres
4.	5509, 5510, 5511	Yarn of manmade staple fibres
5.	5601	Wadding of textile materials and articles thereof; such as absorbent cotton wool (except cigarette filter rods)
6.	5602	Felt, whether or not impregnate, coated, covered or laminated
7.	5603	Nonwovens, whether or not impregnated, coated, covered or laminated
8.	5604	Rubber thread and cord, textile covered; textile yarn, and strip and the like of heading 5404 or 5405, impregnated, coated, covered or sheathed with rubber or plastics
9.	5605	Metallised yarn, whether or not gimped, being textile yarn or strip or the like of heading 5404 or 5405, combined with metal in the form of thread, strip or powder or covered with metal [ other than-(i) real zari thread (gold) and silver thread combined with textile thread (ii)
S. No.	Chapter / Heading / Sub-heading / Tariff item	Description of Goods
		imitation zari thread or yan known by any name in trade parlance]
10.	5606	Gimped yarn, and strip and the like of heading 5404 or 5405, gimped (other than those of heading 5605 and gimped horsehair yarn); chenille yarn (including flock chenille yarn); loop wale-yarn
11.	5607	Twine, cordage, ropes and cables, whether or not plaited or braided and whether or not impregnated, coated, covered or sheathed with rubber or plastics [other than jute twine, coir cordage or ropes]
12.	5609	Articles of yarn, strip or the like of heading 5404 or 5405, twine, cordage, rope or cables, not elsewhere specified or included
13.	5701	Carpets and other textile floor coverings, knotted, whether or not made up
14.	5702	Carpets and other textile floor coverings, woven, not tufted or flocked, whether or not made up, including “Kelem”, “Schumacks”, “Karamanie” and similar hand- woven rugs
15.	5703	Carpets and other textile floor coverings (including Turf), tufted, whether or not made up
16.	5704	Carpets and other textile floor coverings, of felt, not tufted or flocked, whether or not made up
17.	5705	Other carpets and other textile floor coverings, whether or not made up; such as Mats and mattings including Bath Mats, where cotton predominates by weight, of Handloom, Cotton Rugs of handloom
18.	5802	Terry towelling and similar woven terry fabrics, other than narrow fabrics of heading 5806; tufted textile fabrics, other than products of heading 5703
19.	5803	Gauze, other than narrow fabrics of heading 5806
20.	5804	Tulles and other net fabrics, not including woven, knitted or crocheted fabrics; lace in the piece, in strips or in motifs, other than fabrics of headings 6002 to 6006
21.	5805	Hand-woven tapestries of the type Gobelins, Flanders, Aubusson, Beauvais and the like, and needle-worked tapestries (for example, petit point, cross stitch), whether or not made up
22.	5807	Labels, badges and similar articles of textile materials, in the piece, in strips or cut to shape or size, not embroidered
S. No.	Chapter / Heading / Sub-heading / Tariff item	Description of Goods
23.	5808	Braids in the piece; ornamental trimmings in the piece, without embroidery, other than knitted or crocheted; tassels, pompons and similar articles[other than saree fall]
24.	5809	Woven fabrics of metal thread and woven fabrics of metallised yarn of heading 5605, of a kind used in apparel, as furnishing fabrics or for similar purposes, not elsewhere specified or included; such as Zari borders
25.	5810	Embroidery in the piece, in strips or in motifs, Embroidered badges, motifs and the like
26.	5811	Quilted textile products in the piece, composed of one or more layers of textile materials assembled with padding by stitching or otherwise, other than embroidery of heading 5810
27.	5901	Textile fabrics coated with gum or amylaceous substances, of a kind used for the outer covers of books or the like; tracing cloth; prepared painting canvas; buckram and similar stiffened textile fabrics of a kind used for hat foundations
28.	5902	Tyre cord fabric of high tenacity yarn of nylon or other polyamides, polyesters or viscose rayon
29.	5903	Textile fabrics impregnated, coated, covered or laminated with plastics, other than those of heading 5902
30.	5904	Linoleum, whether or not cut to shape; floor coverings consisting of a coating or covering applied on a textile backing, whether or not cut to shape
31.	5905	Textile wall coverings
32.	5906	Rubberised textile fabrics, other than those of heading 5902
33.	5907	Textile fabrics otherwise impregnated, coated or covered; painted canvas being theatrical scenery, studio back- cloths or the like
34.	5908	Textile wicks, woven, plaited or knitted , for lamps, stoves, lighters, candles or the like; incandescent gas mantles and tubular knitted gas mantle fabric therefor, whether or not impregnated
35.	5909	Textile hose piping and similar textile tubing, with or without lining, armour or accessories of other materials
36.	5910	Transmission or conveyor belts or belting, of textile material, whether or not impregnated, coated, covered or
S. No.	Chapter / Heading / Sub-heading / Tariff item	Description of Goods
		laminated with plastics, or reinforced with metal or other material
37.	5911	Textile products and articles, for technical uses, specified in Note 7 to this Chapter; such as Textile fabrics, felt and felt-lined woven fabrics, coated, covered or laminated with rubber, leather or other material, of a kind used for card clothing, and similar fabrics of a kind used for other technical purposes, including narrow fabrics made of velvet impregnated with rubber, for covering weaving spindles (weaving beams); Bolting cloth, whether or Not made up; Felt for cotton textile industries, woven; Woven textiles felt, whether or not impregnated or coated, of a kind commonly used in other machines, Cotton fabrics and articles used in machinery and plant, Jute fabrics and articles used in machinery or plant, Textile fabrics of metalised yarn of a kind commonly used in paper making or other machinery, Straining cloth of a kind used in oil presses or the like, including that of human hair, Paper maker's felt, woven, Gaskets, washers, polishing discs and other machinery parts of textile articles
38.	6501	Textile caps
39.	6505	Hats (knitted/crocheted) or made up from lace or other textile fabrics
40.	9404	Products wholly made of quilted textile material not exceeding Rs. 2500 per piece

Change in value. No change in rate (5%)

S. No.	Chapter / Heading / Sub-heading / Tariff item	Description of Goods
1.	61	Articles of apparel and clothing accessories, knitted or crocheted, of sale value not exceeding Rs. 2500 per piece
2.	62	Articles of apparel and clothing accessories, not knitted or crocheted, of sale value not exceeding Rs. 2500 per piece
3.	63 (other than 63053200, 63053300, 6309)	Other made up textile articles, sets of sale value not exceeding Rs. 2500 per piece
4.	9404	Cotton quilts of sale value not exceeding Rs. 2500 per piece

(18% to 5%)

S. No.	Chapter / Heading / Sub-heading / Tariff item	Description of Goods
1.	5402, 5404, 5406	All goods
2.	5403, 5405, 5406	All goods
3.	5501, 5502	Synthetic or artificial filament tow
4.	5503, 5504, 5506, 5507	Synthetic or artificial staple fibres
5.	5505	Waste of manmade fibres

(12% to 18%)

S. No.	Chapter / Heading / Sub-heading / Tariff item	Description of Goods
1.	61	Articles of apparel and clothing accessories, knitted or crocheted, of sale value exceeding Rs. 2500 per piece
2.	62	Articles of apparel and clothing accessories, not knitted or crocheted, of sale value exceeding Rs. 2500 per piece
3.	63 [other than 6309]	Other made up textile articles, sets of sale value exceeding Rs. 2500 per piece [other than Worn clothing and other worn articles; rags]
4.	9404	Cotton quilts of sale value exceeding Rs. 2500 per piece
5.	9404	Products wholly made of quilted textile material exceeding Rs. 2500 per piece

Why the Change?

These revisions are a strategic move by the GST Council with clear goals in mind:

Boost "Make in India": Lowering taxes on raw materials gives a much-needed lift to our domestic textile manufacturers.
Keep Everyday Fashion Affordable: By keeping taxes low on mass-market clothing, the changes ensure that essential apparel remains accessible for the average household.
Taxing Luxury Fairly: The higher rate on premium goods follows a simple logic: those who can afford luxury can contribute a bit more in taxes.

For shoppers, this could mean lower prices on many everyday items. For small businesses, it promises better profit margins and a potential increase in sales. Let's dive into the specifics.

1. A Fresh Start for Yarn & Fibre Makers

The Change: GST on man-made filaments, synthetic yarns, and staple fibres has been slashed from 12%/18% to just 5%.

Imagine you're a small manufacturer producing polyester yarn. Previously, a high tax on your product meant you had more money tied up just waiting for tax refunds, making it harder to compete with international suppliers.

For Businesses: This is a game-changer. It frees up crucial working capital, allowing them to invest back into their operations. It also makes Indian synthetic blends more competitive on the global stage, potentially boosting exports.
For Consumers: This change will likely trickle down to you. Clothes made from polyester, viscose, and other blended fabrics could soon see a price drop on their tags.

2. Fabrics & Home Goods

The Change: Fabrics like non-wovens, embroidered cloth, terry towels, and even carpets now fall under the 5% GST slab, down from 12%.

Think about the bustling textile clusters in places like Panipat, known for home furnishings, or Surat, a hub for fabrics. This rate cut directly supports the thousands of small and medium-sized enterprises (MSMEs) in these regions.

For Businesses: Lower production costs mean healthier profit margins and a stronger footing for handloom weavers and carpet makers. This can spur growth and protect traditional crafts.
For Consumers: Redecorating your home just got more affordable. Expect to see better prices on towels, bedsheets, curtains, and floor coverings.

3. Garments & Apparel

The Change: This is where things get interesting. The GST rate now depends on the price of the final garment.

Apparel up to ₹2,500 per piece: The rate stays at an affordable 5%.
Apparel above ₹2,500 per piece: The rate climbs from 12% to 18%.

This value-based distinction creates different outcomes for different segments of the market.

For the Mass Market: Everyday clothing remains budget-friendly. This is great news for both middle-class families and the retailers who cater to them, as it keeps demand steady.
For Premium Brands: That designer dress or high-end suit will now cost more. This might cause a slight slowdown in urban luxury retail as shoppers adjust to the new prices. Exporters of luxury garments might also feel the squeeze, as their products become more expensive for international buyers.

4. Made-Ups & Quilts

The Change: Similar to garments, a value-based system now applies to quilts and other made-up textile articles.

Items below ₹2,500: Taxed at 5%.
Items above ₹2,500: Taxed at 18% (up from 12%).

This means a standard cotton quilt for your home will likely remain cheap or get even cheaper.

For Businesses: Brands selling basic, affordable bedding will benefit from sustained demand. However, luxury bedding brands will face higher output costs, which they may pass on to customers.
For Consumers: You'll find it easier to buy essential home comforts, but premium, high-thread-count sheets and designer quilts will come with a higher price tag.

What This Means for Exporters

The new GST structure presents a mixed bag for export-oriented businesses.

On the one hand, with raw material taxes now at a low 5%, exporters need less money upfront to run their business. This is especially helpful for those dealing in synthetic fibres, who no longer have to pay high input taxes and wait for refunds.

On the other hand, the higher 18% GST on premium apparel could make Indian luxury fashion less competitive in the international market. Exporters will need to balance the lower input costs with the higher tax on their finished goods to maintain their global standing.