Cotton Import Duty Relief Gets Thumbs Up From Textile Industry

The textile manufacturers, exporters and industry bodies have warmly welcomed the government's decision to suspend import duty on cotton for five months.

They believe that such a step may be helpful in reducing the increasing raw material costs, especially when the domestic supplies have continued to be scarce.

The exemption will be available from 1 June to 30 October 2026.

For many textile companies, the announcement comes at a crucial time. Industry estimates suggest cotton consumption this season could exceed production by a wide margin.

Demand Seen Outpacing Supply

Industry associations estimate India's cotton output at around 290 lakh bales this season. Demand from spinning mills and textile manufacturers, however, is expected to be between 330 lakh and 340 lakh bales.

That leaves a gap of roughly 50 lakh to 70 lakh bales, forcing many companies to look overseas for supplies.

The removal of import duty is expected to make those purchases more economical.

Cotton Prices Had Climbed Sharply

Raw material costs have been a major concern for the sector over the past few months.

Cotton prices moved up from about ₹54,500 per candy to nearly ₹71,000 per candy before easing slightly in recent weeks. The rise affected several parts of the textile chain, particularly smaller manufacturers with limited pricing power.

Many exporters had argued that higher cotton and yarn costs were making it harder to compete with suppliers from other countries.

Industry Bodies Welcome The Move

The Southern India Mills' Association said it had repeatedly sought removal of the 11% duty and described the latest announcement as a practical step that would benefit mills, exporters and garment manufacturers alike.

The association also pointed out that similar duty waivers were introduced in 2022 and again in 2025 when supply conditions tightened.

The Apparel Export Promotion Council said smaller businesses are likely to benefit the most. According to the council, lower cotton costs should eventually translate into lower yarn prices, helping exporters quote more competitive prices in overseas markets.

Exporters See Opportunity

The Confederation of Indian Textile Industry said the temporary relief could help Indian manufacturers compete more effectively with textile-producing nations where cotton imports are available without similar duties.

Industry representatives also believe the timing could be important as exporters prepare to tap opportunities from new trade agreements and overseas demand.

They maintain that cotton imports are generally used to meet quality specifications and export commitments rather than replace domestic produce.

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Sector Looking For A Boost

The textile and apparel industry remains one of the country's largest sources of employment and export earnings.

Yet the sector has faced a difficult year. Textile and apparel exports slipped 2.2% in FY26 to $35.79 billion.

Many companies now hope easier access to imported cotton will help improve cost competitiveness and support order flows in the months ahead.

Sources:

The Hindu Businessline

Rediff Money