The government is in advanced stage of consultation regarding the 11% customs duty on imports of raw cotton, with a decision expected soon, according to a senior official. As reported by Business Standard, ministries including finance, textiles, and agriculture are deliberating on the duty, with the textile industry seeking its removal to mitigate cost pressures on domestic companies due to high prices. A senior official stated that "We are talking to Finance and Agriculture (ministries), both, and it is in an advanced stage of consultation. We hope that the consultation will be finalised in the near future."
A delegation comprising apparel industry representatives and exporters recently met Vice President C P Radhakrishnan and several Union ministers, seeking the removal of the duty. The delegation presented critical supply-demand data showing that India's textile industry's cotton requirement for the current year is projected at around 337 lakh bales, whereas cotton arrivals for the 2025-26 season are estimated at 292.15 lakh bales, resulting in a supply-demand gap of nearly 45 lakh bales. This shortage is putting pressure on spinning mills and downstream textile manufacturers due to the limited availability of high-quality raw materials and rising input costs.
India currently imposes 11% duty on cotton that took effect from January 1, 2026, after the exemption period ended. As reported by Business Standard, the import duty on Long Staple Cotton or ELSS cotton remains at zero as India is not a major producer of this variety. The textiles sector has been advocating for duty removal, arguing it would provide immediate relief while ensuring India's competitiveness in world markets. When India last lowered cotton import duty, the total outflow was around $1.1-1.2 billion with substantial duty foregone, forcing farmers to sell produce below minimum support price rates when 3 million bales were imported in just three months during the previous duty reduction period.
All major textile industry associations have approached the central government requesting abolition of import duty due to surge in domestic cotton prices and the current West Asia crisis. According to Business Standard, newly-elected Tamil Nadu Chief Minister C Joseph Vijay has also approached Prime Minister Narendra Modi to scrap the import duty to prevent job losses and protect the domestic textile industry. Tamil Nadu houses one of the largest textile industries in the country. The textile industry's advocacy has intensified with the recent delegation meeting and supply gap analysis highlighting the urgent need for duty relief.
The textiles sector fears the existing duty structure will increase input costs, adversely impacting domestic textile industry competitiveness and export commitments. As reported by Business Standard, there are concerns about shifting towards blended fibres as synthetic fibre raw materials enjoy duty exemptions while raw cotton remains subject to duty, leading to uneconomic shifts towards the blended industry. A section of the cotton trade argues that duty cuts could be detrimental to farmer interests ahead of the kharif sowing season and harm growers holding approximately 4 million bales in anticipation of better prices.
