São Paulo Manufacturers Warn That Ending ICMS Tax Credit Could Undermine Competitiveness Against Asian Imports
Brazil’s textile industry is urging the São Paulo state government to extend its ICMS presumed tax credit until 2032, arguing that the incentive is essential to maintaining the competitiveness of domestic manufacturers against growing pressure from Asian imports and interstate tax competition.
Representatives of Sinditêxtil-SP, together with leaders from other textile industry associations, recently met officials from the São Paulo State Secretariat of Finance and Planning (Sefaz-SP) to request an early renewal of the tax incentive, which is currently scheduled to expire on 31 December 2026.
The delegation emphasized that extending the incentive would provide greater legal certainty for manufacturers while allowing companies to plan investments and budgets for the coming years.
Textile Industry Highlights Positive Economic Impact
During the meeting, Haroldo Silva, Institutional Relations Director of Sinditêxtil-SP, presented industry data showing the positive impact of the incentive since its introduction in 2017.
According to the association, São Paulo’s textile industry reversed a prolonged period of decline and has since achieved an average 6.17% annual increase in revenue. The sector also continues to support more than 371,000 jobs across the state’s textile and apparel value chain.
Industry leaders argue that the tax credit has played an important role in improving the competitiveness of local manufacturers while encouraging investment and preserving employment.
Read More: Rhodia Launches R$100 Million Investment Drive to Boost Brazil’s Textile Industry
Competing Against Asian Imports
One of the main concerns raised by industry representatives is the increasing pressure from lower-cost textile imports, particularly from Asia.
According to Luiz Arthur Pacheco, President of Sinditêxtil-SP, eliminating the tax incentive would weaken the competitive position of São Paulo’s textile manufacturers at a time when global competition is becoming increasingly intense.
He noted that the objective is not to create an unfair market advantage but rather to maintain tax conditions that allow domestic producers to compete on a more equal footing with manufacturers operating under different tax structures and production costs.
Investment Certainty for 2027 and Beyond
Industry representatives also stressed that an early decision would reduce uncertainty for companies preparing their financial and investment plans for 2027 and the years ahead.
Following discussions with officials from the Finance Secretariat, the industry associations will submit additional economic data to reinforce their request for extending the incentive through 2032.
A Broader Challenge Facing Global Textile Manufacturing
The discussion in Brazil reflects a challenge facing textile industries worldwide.
As international competition intensifies and low-cost imports continue to reshape global markets, governments are increasingly balancing fiscal policy with industrial competitiveness.
For many textile-producing countries, targeted tax incentives are becoming an important tool to preserve manufacturing capacity, protect employment, and encourage investment in higher-value textile production.
Whether São Paulo extends the ICMS tax credit could therefore become an important indicator of how governments plan to support domestic textile industries in an increasingly competitive global environment.
