The textile industry, which welcomed the revision of GST rates for the textile value chain in both manmade fibre and cotton sectors, expressed disappointment over 18% duty for garments priced above ₹2,500 each.

The increase of the 5% limit for garments from ₹1,000 each to ₹2,500 is a positive move, said the Cloth Manufacturers Association of India (CMAI). However, in the entire textile value chain from fibre to garment, garments above ₹2,500 are the only products which are not at 5%. “We earnestly request the GST Council to remove this anomaly and either place all garments, irrespective of the price, at 5% or fix a more reasonable and realistic price level (for 18%).”

Also read: GST Council meeting highlights

“Garments above the price of ₹2,500 are also consumed in large numbers by the common man and middle class, especially woollen clothing, occasion wear, Indian traditional clothing, handlooms, embroidered clothes produced by artisans and traditional weavers. These will see a significant price increase due to this change of GST rate,” it said.

According to Sanjay Jain, chairman of the national textiles committee of the Indian Chamber of Commerce, all formal wear and wedding dresses are priced above ₹2,500 and even a common man spends for dresses during weddings. “Anything that gets expensive will affect sales. Hence, we request the government to have a relook at the 18% duty for garments priced above ₹2,500,” he said.

Rakesh Mehra, chairman of the Confederation of Indian Textile Industry, said rectification of the GST inversion in the manmade fibre (MMF) value chain by aligning MMF fibre and yarn at 5% from 18% and 12% earlier respectively addresses the long-standing blockage of working capital for thousands of spinners and weavers. With over 70%-80% of textile and apparel units in the MSME sector, this reform will ease liquidity pressures and enhance the competitiveness of the industry.

Chairman of the Southern India Mills Association, S.K. Sundararaman, said raw materials of MMF clothing were taxed at 18% and 12%, while fabrics and garments were placed under the 5% slab. This tax structure suffered severe duty inversion, ultimately making the poor man’s clothing expensive. With this issue rectified, imports would also reduce. Though PTA, MEG and wood pulp, the raw materials for manufacture of polyester and viscose respectively, continue to attract 18%, the revised change in the law to provide 90% provisional refund in seven days was the solution for addressing the duty inversion for the MMF producers.

Secretary general of the Polyester Textile and Apparel Industry Association, R.K. Vij, called for reduction of duty for PTA, MEG and wood pulp before September 22, 2025.

The rupee fell 12 paise to close at 88.14 (provisional) against the U.S. dollar on Thursday (September 4, 2025) amid sustained foreign fund outflows and a stronger greenback.

However, positive sentiment in the domestic equity markets — which were buoyed by the GST rate revision — and a drop in international crude oil prices prevented sharper losses in the local unit, according to forex traders.

At the interbank foreign exchange, the rupee opened at 88.09 against the U.S. dollar and traded in the range of 87.85-88.19 before settling at 88.14 (provisional), down 12 paise from its previous close.

The rupee recovered 13 paise from its all-time low level to settle at 88.02 against the U.S. dollar on Wednesday (September 3, 2025).

“The rupee fell after rising in the morning as equities were unable to sustain their gains while the Reserve Bank of India sold dollars at the higher end and FPIs continued to be dollar buyers and equity sellers,” Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.

“U.S. tariff concerns, along with capital outflows, have been constantly weighing on sentiments of the rupee, which has not been able to show any gains except sporadically. The revisions to GST… led to a marginal improvement early in the morning,” he said.

Mr. Bhansali said the local unit is expected to trade in the range of 87.80 to 88.50.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was up 0.08% to 98.21.

Brent crude, the global oil benchmark, was trading 1.07% lower at $66.88 per barrel in futures trade.

On the domestic equity market front, Sensex rose 150.30 points to settle at 80,718.01, while Nifty was up 19.25 points to 24,734.30.

Foreign institutional investors offloaded equities worth ₹1,666.46 crore on Wednesday (September 3, 2025), according to exchange data.