The finance ministry is considering a proposal to do away with import duties on 35 specialised fibres and filament yarns, like high denier yarn, micro denier staple fibre, stainless steel staple fibre and moda acrylic staple fibre.
Not manufactured in India, these items are currently drawing a duty of 20 per cent.
The fibres and yarns are commonly referred to as specialty or technical textiles. They are widely used in sectors like construction, automobiles, packaging, healthcare, sports and defence because of their technical and functional properties.
Officials, however, felt that there can be practical difficulties in reducing duties as Customs officials might find it difficult to distinguish these yarns from ordinary yarns.
The textiles ministry, which made the proposal, has also sought direct tax benefits for textile companies, which reinvest their profits in the sector.
"We want to encourage more investment in the sector. We have recommended that textile units be given an investment allowance for undertaking new investments," an official said.
The textiles ministry is also having a re-think on introducing a new Textile Development and Consumer Protection Act because of its proposal to remove cotton, cotton yarn and cotton and woollen textiles from the Essential Commodities Act.
"We are examining the possibility of introducing notifications under existing Acts like the Bureau of Indian Standards, the Trademark Act, the Industrial Development and Regulation Act, the Collection of Statistics Act and the Consumer Protection Act," an official said.
Officials said the textiles ministry was considering modifying existing Acts rather than introducing new ones. This is because the ministry feels it will be easier to issue notifications under the existing Acts.
The ministry wants to protect consumer interests in terms of necessary markings on fabrics and garments, officials said.
An expert committee for the development of technical textiles had recommended that basic Customs duty on specialised fibre or filament yarn be reduced to 5 per cent or Rs 15 per kg, whichever is higher.
The ministry has also proposed reducing import duties on textiles machinery, including second-hand machinery, to 5 per cent, barring a select list of around 23-24 machines, which are manufactured locally.