India Budget: Textile sector seeks stable policy for speciality yarns

In a letter to the government, R K Vij, secretary general of the Polyester Textile Apparel Industry Association (PTAIA), said that speciality yarns—known for their luxury finishes and moisture-wicking properties—are used in high-value garments, home décor and industrial textiles. The industry emphasised that predictable government policy is critical to ensuring sustained investment, especially after recent experiences in which initiatives such as mandatory quality control orders (QCOs) were withdrawn within two years.

The industry expressed concern over short-sighted measures such as the withdrawal of mandatory QCOs within a short span of two years, stating that such decisions do not support the long-term vision required to develop a robust speciality yarn ecosystem. It noted that abrupt policy reversals send mixed signals to investors and discourage capital-intensive commitments, particularly in emerging segments where consistency and clarity are essential for sustained growth.

Vij said, “Many man-made fibre producers have already entered the specialty yarn segment, but widespread industry participation requires government support. Among the key budget expectations are a protective customs duty framework to safeguard domestic manufacturers, long-term tariff and non-tariff measures, and incentives in the form of capital and interest subsidies.” The association recommended that such subsidies come with lower investment thresholds, allowing small and medium-sized spinners to participate.

The letter also stressed the need to align with downstream industries to better understand long-term demand for speciality yarns. At present, most producers are investing based on internal estimates, without clear signals from the market or policy planners. The association urged the government to clarify which yarn types are strategically important and to ensure long-term demand support.

A major concern highlighted was the inverted GST structure in the man-made yarn industry, under which raw materials such as PTA and MEG attract 18 per cent GST, while finished yarn is taxed at only 5 per cent. This results in significant working capital being locked up in monthly refunds. The association added that investment in new plant and machinery further increases the accumulation of input tax credit, much of which is unrecoverable as the yarns are largely consumed domestically.

The association pointed out that all current investments in speciality yarns have been made without any form of government assistance. It warned that unless the inverted duty structure is corrected and supportive policies are introduced, future expansion could slow, despite growing global and domestic demand for advanced yarn types.

With clear policy direction, financial support and closer industry–government alignment, the sector believes India can build a strong presence in the speciality yarn market, both domestically and globally.

ALCHEMPro News Desk (KUL)