CITI Urges Government to Permanently Remove Cotton Import Duty for Textile Sector Support

The Confederation of Indian Textile Industry (CITI) has urged the government to permanently abolish the 11% import duty on cotton. This move, they argue, would alleviate cost pressures for domestic textile companies. Last week, a CITI delegation met with Union Agriculture Minister Shivraj Singh Chouhan to discuss this issue, seeking his intervention for the permanent removal of the duty on all cotton varieties.

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India's textile industry, which is the second-largest employment sector in the country, relies heavily on consistent access to high-quality cotton. Due to a persistent demand-supply gap, the government extended the exemption from import duty on cotton until December 31, 2025. However, without further notification from the government, this duty will be reinstated on January 1, 2026.

Impact on Competitiveness and Supply

CITI has expressed concerns that reimposing the cotton import duty will negatively affect the competitiveness of India's textile and apparel sector. The minister assured CITI that these concerns would be carefully reviewed. The industry body also pointed out that cotton production in India is declining and is expected to hit its lowest level in two decades this year, raising fears of supply shortages.

The textile associations have welcomed the government's decision to exempt all cotton varieties from the 11% import duty. They argue that reinstating this duty would further increase cost pressures for companies. Over the past decade, India has imported an average of 20 lakh bales annually, which accounts for about 6.8% of India's average domestic production.

Global Competition and Export Challenges

Imports are primarily driven by quality and specification needs, catering to specialised requirements and export orders without replacing domestic cotton. Meanwhile, major competing countries like Bangladesh and Vietnam offer duty-free access to cotton, giving them a structural cost advantage over India.

The textile and apparel sector in India faces another challenge with a 50% US tariff effective from August 27, 2025. The US is India's largest market for textile exports, contributing nearly 28% to overall revenue. In the financial year 2024-25, India's textile exports to the US were valued at almost USD 11 billion.

As one of the largest job generators in India, the textile sector is crucial for livelihoods. CITI argues that removing import duties permanently would help maintain competitiveness and support this vital industry amidst global challenges.

With inputs from PTI