India’s Goods and Services Tax (GST) Council, likely to meet soon, is expected to take up rationalisation of rates in the textile sector in tune with global markets. The government is reportedly concerned over differential rates of textile items causing hardships, especially on refund to exporters, and feels ending those tax anomalies needs immediate attention.

There are three rates at present—5, 12 and 18 per cent—for various items in the Indian textile sector, while countries like Thailand (10 per cent), China (16 per cent) and Indonesia (7 per cent) have a single rate. This makes them more lucrative and competitive, a report said.

Customs duties for textile items add to exporters’ problems as well. Ideally, there should be rationalisation in customs duty and GST rates, the report said quoting an anonymous Indian Government official. Any such change in customs duty requires proper discussion and World Trade Organisation (WTO) norms have to be kept in mind.