Whalesbook
Textile Lobby Pushes for Duty-Free Cotton
The Confederation of Indian Textile Industry (CITI) has formally requested the government to permanently abolish the 11% import duty on cotton. This demand, submitted in anticipation of the Union Budget 2026, aims to alleviate significant cost pressures and bolster the global competitiveness of Indian textile and apparel manufacturers.
Reinstated Levy Worsens Outlook
While an import duty exemption on cotton was in place until December 31, 2025, its subsequent reinstatement from January 1, 2026, has alarmed the industry. CITI contends that this 11% levy directly undermines the sector's ability to compete internationally.
Production Woes and Global Disadvantage
CITI highlighted a concerning drop in domestic cotton production, projected to reach a nearly two-decade low this year. This supply crunch, coupled with the import duty, intensifies cost challenges. The industry body argues that imported cotton primarily meets specialized needs for export orders and does not displace domestic supply.
Export Market Under Pressure
Competitors like Bangladesh and Vietnam benefit from duty-free cotton imports, creating a structural cost advantage. This disparity is critical as the Indian textile sector, a major employer, grapples with a new 50% US tariff effective August 27, 2025. The United States represents India's largest textile export destination, accounting for approximately 28% of revenue, valued at nearly $11 billion in FY2024-25.