Garment and Textile Sector Seeks Tax Breaks and Export Support for FY27 Budget

By | November 5, 2025
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Garment and Textile Sector Seeks Tax Breaks and Export Support for FY27 Budget

 

Issue: To address the severe impact of US import tariffs and global recessionary pressures, the Indian garments and textiles industry submitted pre-Budget recommendations for FY 2026-27, seeking a package of tax concessions, liquidity support, and rationalization of key export schemes.

Facts:

  • The textiles and garments sector employs over 45 million people and aims to grow from $174 billion to $350 billion by 2030.
  • The sector has been hit hard by US additional tariffs of 50%, making Indian exports uncompetitive against rivals like Vietnam and Bangladesh (where tariffs are around 19-20%).
  • Exports of textiles, garments, and made-ups fell 37% between May and September 2025. Garments alone declined 44%.

Decision:

The industry submitted a package of tax and non-tax proposals to the Textiles Secretary during pre-budget consultations, urging the government to enhance their global competitiveness and provide immediate liquidity support.

Key TakeDowns (Industry Demands):

  • Resumption of Interest Subvention: The industry made a strong pitch for the resumption of the Interest Equalisation Scheme on pre- and post-shipment rupee export credit, which had expired. This is considered essential to support the MSME segment of the apparel export industry.
  • Concessional Tax Rate: They recommended reintroducing the concessional corporate tax rate of 15% (under Section 115BAB) to support the sustained growth of new manufacturing companies in the apparel industry.
  • Accelerated Depreciation: Exporters proposed an accelerated depreciation allowance of 100% over two years on eligible capital assets for tax computation purposes. This would advance claims, provide a short-term liquidity advantage, and enable reinvestment in modernization without revenue loss to the government.
  • IGCR Scheme Rationalization: They sought simplification of the Import of Goods at Concessional Rates of Duty (IGCR) Rules, requesting that benefits for duty-free import of trims and accessories be extended to intermediate suppliers and deemed exporters and that a minimum wastage of 10% be allowed.

Source :-  The Hindu Business Line