The Northern India Textile Mills Association (NITMA) has made an urgent appeal to the Union Finance Minister and the GST Council ahead of their meeting on September 3–4, seeking a uniform 5% GST rate on Polyester Staple Fiber (PSF) and Polyester Spun Yarn (PSY).
Mr. Sidharth Khanna, President of NITMA, highlighted the unresolved issue of Inverted Duty Structure (IDS) impacting the Man-Made Fibre (MMF) textile value chain. Unlike cotton, which enjoys a flat 5% GST across stages, the MMF sector continues to face varying tax rates that weaken manufacturing competitiveness.
Current GST rates vs proposed rationalization:
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Polyester Staple Fiber (Virgin & Recycled), HSN 55032000 – 18% → Proposed 5%
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Polyester Spun Yarn, HSN 55092100 & 55092200 – 12% → Proposed 5%
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MMF Fabrics – 5% (no change)
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MMF Garments (< ₹1,000) – 5% (no change)
NITMA stressed that taxing PSY at 12% while MMF fabrics are at 5% and PSF at 18% creates severe financial stress for spinning operations. If the anomaly is not corrected, it could force unit closures and trigger job losses across the country.
The association warned of major concerns, including:
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5–6% annual turnover stuck in GST refunds
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High interest costs on blocked capital
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Complex refund and compliance burdens
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Higher investment costs due to 18% taxation on fibre
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Imported yarns gaining an unfair edge, hurting “Make in India”
Mr. Khanna stated: “This is a defining moment for India’s textile sector. Correcting the inverted duty structure will not only neutralize the impact of U.S. tariffs but also unlock growth, investment, and resilience across the MMF value chain—turning challenge into opportunity.”
