Textile industry seeks removal of cotton import duty

India’s textile industry has sought the removal of 11% import duty on cotton, creation of a strategic cotton reserve, and measures to improve selling policy and credit availability, according to the Confederation of Indian Textiles Industry (CITI) report released Thursday.

The industry body said declining domestic cotton production, rising minimum support prices (MSP) and import duties have pushed Indian cotton prices above global benchmarks, affecting the textile sector's competitiveness.

“A stable and predictable policy is imperative to allow the mills to sustain their operations and fulfil the market demand,” said the report, adding that competing Asian nations enjoy duty-free access to imported cotton, placing India at a significant disadvantage.


The report is jointly prepared with Gherzi Textile Organisation, a Swiss consultancy and engineering firm, and the International Cotton Advisory Committee (ICAC).

Among its recommendations, the report proposed empowering the Cotton Corporation of India (CCI) to supply cotton to mills at internationally competitive prices. It estimated that maintaining such a mechanism would require an annual government buffer of about Rs 1,500 crore to supply nearly 100 lakh bales, roughly one-third of the crop.

The report also recommended that CCI maintain a strategic cotton reserve, like China, for about three months of consumption to cushion against price volatility. It further proposed a Cotton Price Stabilization Fund scheme with a 5% interest subvention to ease working capital pressures during peak procurement from November to March.

“Improvement in availability of credit and financing would ease liquidity for MSME (micro, small and medium enterprises) spinning mills and intermediaries,” mentioned the report.

The textile sector contributes around 2% to India’s gross domestic product (GDP), accounts for 8% of merchandise exports and provides direct employment to about 45 million people, besides supporting 55 million indirectly.

India’s cotton production declined to 291 lakh bales in 2025-26 from 398 lakh bales in 2013-14, even as consumption increased to 328 lakh bales from 300 lakh bales over the same period. Average cotton yield in India remains around 450 kg per hectare, lower than the global average of about 800 kg per hectare.

The report also warned that if the current price differential persists, India’s cotton yarn exports could decline by 20-25%, potentially leading to an annual loss of $0.5-1.2 billion in textile export earnings. India’s share in global cotton yarn exports dropped to 28% in 2024 from 38% in 2015.