Textile Exporters Get Relief with Extended Obligation Period

The Indian government’s decision to extend the export obligation period under the Advance Authorisation Scheme from six to 18 months for products subject to mandatory quality control orders (QCOs) by the Chemicals Ministry will provide critical relief to exporters of man-made fibre (MMF) textiles and technical textiles, the Textile Ministry announced on Saturday. This move, effective August 28, 2025, aims to mitigate the impact of the U.S.’s 50% tariffs on Indian goods, imposed on August 27, 2025, in response to India’s Russian oil imports.

The extension, which aligns with a similar relaxation for textile-related QCOs, allows exporters to import duty-free raw materials like polyester staple fibre, filaments, and spun yarn without adhering to QCOs, provided the materials are used for exports. This flexibility, previously granted for viscose staple fibre in March 2024, ensures access to competitive global inputs, enhancing India’s export edge. “These measures improve ease of doing business and bolster the competitiveness of Indian MMF and technical textiles,” the Textile Ministry stated, noting that 18% of Advance Authorisations are issued for the textile sector.

The U.S. tariffs, escalating from 4.57% to 30.57% for Indian textiles—a 669% hike—threaten a $2.5–3 billion revenue loss, with knitted garments facing up to 63.9% effective duties. Exporters like Vardhman Textiles and Welspun India, which rely on the U.S. for 12.45% and 65% of their exports respectively, have seen share price drops of 5.5–18%. The 18-month period offers breathing room to meet export obligations, helping firms like Nitin Spinners and Pearl Global navigate the crisis.

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Industry leaders like Sanjay K. Jain of the Indian Chamber of Commerce hailed the decision, stating it allows exporters to source cheaper raw materials and maintain global market share against competitors like Bangladesh and Vietnam. The government is also exploring tax cuts and export incentives to counter the tariff impact, with hopes of a U.S.-India trade deal to restore competitiveness.

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