PHDCCI Seeks Zero Customs Duty On Rayon-Grade Wood Pulp to Strengthen India's Man-Made Cellulosic Fibre Industry

New Delhi, November 10, 2026: The PHD Chamber of Commerce and Industry (PHDCCI) has recommended the elimination of Basic Customs Duty on rayon-grade wood pulp in its Pre-Union Budget 2027–28 proposals, with the objective of reducing input costs, strengthening domestic viscose fibre manufacturing and enhancing the competitiveness of India's textile and apparel industry.
India's domestic textile and apparel market is estimated at approximately USD 157 billion in FY2025–26, growing at a compound annual growth rate (CAGR) of around 7%, according to the India Brand Equity Foundation (IBEF).
The sector continues to demonstrate resilience in international markets. India's total textile exports, including handicrafts, increased from ₹3,09,859.3 crore in FY2024–25 to ₹3,16,334.9 crore in FY2025–26, registering growth of 2.1%.
Recognising the importance of cost competitiveness and domestic value addition, PHDCCI has proposed reducing the customs duty on rayon-grade wood pulp (HSN 4702 00 10) from the existing effective rate of 2.75% to zero.
Rayon-grade wood pulp, a specialised grade of dissolving wood pulp, is a critical raw material for manufacturing regenerated cellulosic fibres, particularly viscose staple fibre (VSF) and viscose filament yarn (VFY). It accounts for nearly 60% of staple fibre production costs, while approximately 92% of India's requirement is met through imports.
The Chamber highlighted the existing tariff asymmetry, as competing countries such as China, Indonesia and Thailand levy zero customs duty on this critical input. Furthermore, viscose fibre imports from ASEAN, which reportedly account for approximately 63% of India's imports, enter the country at preferential or zero-duty rates under the applicable trade agreement.
This creates a cost disadvantage for Indian viscose fibre manufacturers, who face customs duties on an essential imported raw material while competing with finished or intermediate products entering under preferential tariff arrangements.
Rayon-grade wood pulp is an important upstream input for India's man-made cellulosic fibre (MMCF) ecosystem, with extensive applications across the apparel and garment industry and technical textiles. Improved cost competitiveness in domestic viscose fibre production can strengthen backward linkages and support value addition across the textile value chain.
"India's textile industry has considerable potential to expand its global market presence, particularly in man-made cellulosic fibres and value-added textile products. However, the competitiveness of domestic fibre manufacturers is closely linked to the availability and cost of critical raw materials. Eliminating customs duty on rayon-grade wood pulp will help address the existing tariff disadvantage, reduce input costs and create a more level playing field for Indian manufacturers. This measure can support domestic capacity expansion, strengthen the man-made cellulosic fibre ecosystem and enhance India's integration into global textile value chains said Anil Gupta, President, PHDCCI."
Rationalising the customs duty structure on essential textile inputs will be important for strengthening domestic manufacturing capabilities, encouraging fresh investments and improving India's competitiveness in the global textile and apparel market.