GST 2.0 rationalisation cuts costs for textiles and logistics sectors

The GST 2.0 rationalisation has reduced rates across textiles and logistics, easing structural anomalies, cutting costs, and boosting demand. The reforms will make garments more affordable, lower freight costs, strengthen SMEs, and enhance India’s export competitiveness, particularly in textile

New Delhi: The rationalisation of Goods and Services Tax under GST 2.0 marks a significant reform aimed at removing structural anomalies, reducing costs, and boosting demand in the textile and logistics industries, both of which are vital for domestic growth, employment, and export competitiveness, according to an official statement on Thursday.

By aligning tax rates across the value chain, the GST reform ensures affordability for consumers, sustains jobs in labour-intensive sectors, and enhances India’s ability to compete globally. In the textile sector, the rationalisation strengthens the entire value chain — from fibre to garment — by reducing distortions, improving garment affordability, reviving retail demand, and supporting export competitiveness, the statement explained.

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The reduction in GST will lead to making apparel more affordable for middle- and low-income households, which will stimulate domestic demand with a significant impact in small towns and rural regions. GST on readymade garments up to Rs 2,500 per piece is now 5 per cent, making apparel more affordable and boosting domestic demand.

GST on man-made fibres and yarns is cut from 12 per cent and 18 per cent to 5 per cent, removing the inverted duty structure and strengthening Small and Medium Enterprises, while the reduction in GST on carpets and other textile floor coverings from 12 per cent to 5 per cent will enhance global competitiveness, according to the statement.

Similarly, a cut in GST on commercial goods vehicles from 28 per cent to 18 per cent will bring down logistics costs and support exports. The GST reforms also extend to the transport sector, which plays a crucial role in reducing logistics costs and supporting industrial growth. Trucks and delivery vans, which carry nearly 65–70 per cent of India’s goods traffic, benefit significantly from tax rationalisation. Cheaper freight movement — reduced cost per tonne-km benefits the transport of textile, FMCG, and e-commerce deliveries.

The cascading effect of lower logistics costs helps reduce overall price pressures and bring down inflation. Besides, lower logistics costs make Indian textiles more competitive abroad.

The GST rationalisation across textiles and logistics sectors is a decisive step towards strengthening India’s manufacturing base, improving affordability, and boosting exports. By reducing structural anomalies and easing cost pressures, these reforms directly benefit consumers, small businesses, and exporters alike. They reinforce the vision of a globally competitive India powered by resilient supply chains and a thriving textile sector, the statement added.