GST Implications for logistics cost structure in the textile industry- Focus on Bangalore City
Author(s): SHILPA K P, Dr. UMAPRABHA S. Dr. DINESH N,
Authors Affiliations:
1.Research Scholar, Department of Commerce, Thanthai Periyar Government Arts and Science College (Autonomous), Affiliated to Bharathidasan University, Trichy, Tamilnadu, India.
2.Assistant Professor & Research Guide, Department of Commerce, Thanthai Periyar Government Arts and Science College (Autonomous), Affiliated to Bharathidasan University, Trichy, Tamilnadu, India.
3.Co Supervisor, Associate Professor, Department of Commerce, CMS Business School, Jain deemed to be University, Race course road, Bangalore, Karnataka, India.
DOIs:10.2017/IJRCS/202511016 | Paper ID: IJRCS202511016Abstract: GST reforms have made a big difference in how logistics costs are structured in the textile industry. These changes have made tax rates simpler, lowered costs, and fixed several past issues with taxes. Some key changes include cutting the GST rate on commercial goods vehicles from 28% to 18% and on logistics services from 12% to 5%. These changes directly reduce the cost of freight and transportation for textile manufacturers, retailers, and exporters. These rate reductions, especially for man-made fibers and yarns, have removed inverted duty structures, improved cash flow for small and medium businesses, and made the supply chain more efficient. By standardizing tax rates from the beginning of the process, like fiber, to the final product, such as garments, GST reforms help cut down on cost distortions, improve the competitiveness of exports, and offer better prices to end users. However, increasing GST on some transport services to 18% might lead to a build up of input tax credits for textile companies, especially those with a lot of finished goods taxed at lower rates. Overall, the reduction in logistics costs is making Indian textiles more competitive both within the country and internationally, improving supply chains and allowing the textile industry to support larger, more affordable manufacturing and exports. This paper looks at how changes to the Goods & Services Tax (GST) in India affect the logistics cost structure of textile companies. By reviewing existing literature, using tax rules, and analyzing a simulated firm-level dataset, the study identifies the impact of GST rate changes and Input Tax Credit (ITC) adjustments on freight, warehousing, handling, and insurance costs. A numerical example shows the impact on cash flow, and a small econometric exercise suggests potential cost reductions for companies following the September 2025 GST adjustments. The paper also offers policy implications and suggestions for textile manufacturers and logistics service providers.
SHILPA K P, Dr. UMAPRABHA S. Dr. DINESH N, (2025); GST Implications for logistics cost structure in the textile industry- Focus on Bangalore City, International Journal of Research Culture Society, ISSN(O): 2456-6683, Volume – 9, Issue – 11, Pp. 96-103. Available on – https://ijrcs.org/