Rising Cotton Prices Spur Industry Call For Import Duty Relief
India’s textile industry has urged the Government of India to allow duty-free cotton imports as domestic prices continue to rise in line with global trends, putting pressure across the value chain.
The sharp increase in cotton prices is impacting margins from spinning mills to garment exporters, with exporters particularly vulnerable due to fixed long-term contracts and limited ability to pass on higher input costs.
The situation comes at a challenging time as textile exports face headwinds from geopolitical disruptions, including tensions in West Asia. While yarn exports have remained relatively stable, supported by demand from China, the broader export segment is under strain.
Supply constraints have further intensified concerns, with domestic cotton production estimated at around 290 lakh bales against a demand of about 330 lakh bales. In addition, untimely rains last year have impacted crop quality, leading to shortages of premium cotton for mills.
To bridge the gap, industry stakeholders are seeking the removal of the 11% import duty on cotton from May to October, covering the lean supply period before fresh arrivals. They argue that such a temporary measure would not impact farmers, as most domestic stocks are typically sold by the end of March.
India had earlier permitted duty-free cotton imports until December 2025, enabling inflows of about 30 lakh bales, along with additional volumes under advance authorisation. However, the industry estimates that at least another 30 lakh bales will be required this year to avoid shortages.
With supplies tightening and prices continuing to rise, the industry has called for an immediate policy decision to stabilise the market and protect export competitiveness.
