India proposes decriminalization of minor textile violations

India is moving to a more proportionate enforcement regime for minor violations in the textile sector, with the government proposing to replace criminal prosecution and imprisonment with administrative warnings and financial penalties.

The proposed Textiles Committee (Adjudication of Penalties and Appeal) Rules, 2026 seek to establish a formal adjudication mechanism for specified contraventions. The move is part of wider efforts to decriminalise minor business-related offences and improve the ease and predictability of doing business in India. Stakeholders have been given 30 days to submit objections and suggestions on the draft rules.

The proposed framework covers violations arising from government orders restricting or prohibiting certain textile exports, as well as orders concerning the sale of specified textile machinery. Under the proposed system, a first-time contravention may result in a warning, while continuing or repeated violations could attract monetary penalties of up to 2.5 million rupees.

The proposed approach marks a significant departure from the existing criminal enforcement mechanism, under which certain violations could result in prosecution and imprisonment. Rather than treating relatively minor regulatory breaches as criminal offences, the new framework would place them within an administrative adjudication process.

Proceedings would begin with the issuance of a show-cause notice detailing the alleged contravention, the applicable legal provisions and the evidence supporting the case. The concerned person would be given 15 days from receipt of the notice to submit a response. The adjudicating officer could allow additional time where justified, provided the reasons for such an extension are recorded in writing.

Following submission of the response, the adjudicating officer would conduct hearings and provide the concerned party an opportunity to appear personally or through an authorised representative. Proceedings would be required to be completed and a reasoned order issued within 180 days.

In determining the penalty, the adjudicating officer would consider factors including the nature and seriousness of the violation, whether it constitutes a repeat offence, mitigating circumstances and any demonstrated loss or damage resulting from the contravention. This would allow penalties to be calibrated according to the circumstances of individual cases rather than imposing a uniform punitive response.

The draft rules also provide for an appeal mechanism. An aggrieved person would be able to challenge an adjudication order before an appellate authority of at least the rank of joint secretary. Appeals could be submitted in person, by registered post or electronically. The appellate authority would have the power to confirm, modify or set aside the original order.

The proposed changes assume significance for an industry that remains a major contributor to India’s merchandise exports and employment. The proposed decriminalisation framework is intended to reduce the regulatory burden without removing compliance obligations. Textile manufacturers, exporters and other businesses would continue to be subject to applicable government orders, inspections and enforcement measures, with financial penalties remaining available for serious, continuing or repeated violations.