FM Nirmala Sitharaman assures support to the textile industry

Union Finance Minister Nirmala Sitharaman with Ravi Sam (left), Vice- Chairman, TEXPROCIL and A Sakthivel Vice-Chairman, Apparel Export Promotion Council, at a meeting in Chennai on Tuesday
| Photo Credit:
BIJOY GHOSH

Union Finance Minister Nirmala Sitharaman assured the textiles industry that the government would take appropriate action to help them tide over the US tariffs crisis. The industry from its side sought immediate policy support for exporters to overcome the impact of the tariff hike.

Speaking to representatives from the textile industry in Chennai on Tuesday, the Finance Minister is said to have assured them that she was aware of the issues faced by the industry and would, in consultation with the Commerce Ministry, help them.

With the GST Council meetings to be held on Wednesday and Thursday, the textile industry anticipates some announcement to support them.

Financial viability

A joint memorandum submitted by the textile industry associations and export promotion councils said that the high tariffs imposed by the US would severely impact not only the growth of exports but also the financial viability of thousands of textile units catering to the US market.

This includes those in the power loom, independent weaving, readymade garment, made-up and kitchen linen segments. The major clusters in Tamil Nadu, including Coimbatore, Tiruppur, Erode, Karur, Madurai, Theni and Virudhunagar are the worst affected, the joint memorandum said.

Among the various requests in the memorandum, the industry wants the government to address GST inverted duty structure in the man-made fibre (MMF) value chain and slotting the entire MMF value chain under 5 per cent GST slab on par with cotton value chain. It also requested the refund of accumulated capital goods GST credit to ease liquidity.

“We highly appreciate the bold stand taken by the Prime Minister against the US tariff and we commit that we would fully support the decisions taken by the Government in this regard,” the memorandum said.

It thanked the Minister for considering industry plea and giving exemption from the 11 per cent import duty on cotton up to December 31, 2025. “This timely relief is a boon to the predominantly cotton-based Indian textile value chain,” the memorandum read.

Relief package

Given the threat posed by the US tariff hike, there is an urgent need for a special relief package and support measures to prevent the units becoming non-performing assets (NPAs), retain the existing US customers to the maximum extent possible, sustain the financial viability till we find alternate markets, the memorandum said.

The US market accounts for approximately 28 per cent ($10 billion-$11 billion) of India’s total textile and clothing exports. Of this, readymade garments constitute around 60 per cent, while yarn, fabric, and made-ups contribute about 32 per cent. The stagnation in export growth for more than 10 years has already rendered 25-30 per cent of production capacity idle, leading to significant financial stress across the textile sector.

Among other requests, the industry has sought extension of the two-year moratorium for the repayment of principal amount and a 30 per cent collateral free loan under Emergency Credit Line Guarantee Scheme with 5 per cent interest subvention (similar to the one extended during Covid both for MSMEs and larger companies).

The industry also requested the reintroduction the Focus Market Incentive Scheme and extend 20 per cent of the freight on board value for all the exports made to US with effect from 27 August 2025 in the form of transferrable duty credit scrip.

Published on September 2, 2025