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Mr Mukundan Menon Managing Director, Voltas Chairman, VoltasBeko President of “Refrigeration and Air Conditioning Manufacturing Association” (RAMA)

India’s textile sector has received a timely policy nudge. The temporary waiver of 11% duty on raw cotton imports until December 31 is more than a cost-saving measure; it’s a confidence signal. For an industry that powers employment and exports, this move stabilises input costs, cushions margins, and creates headroom for modernisation. The message is clear: policy agility can restore competitiveness when volatility threatens growth.

The Rationale Behind the Waiver

The textile sector in India has been navigating a turbulent global environment. The imposition of higher tariffs by the United States, one of India’s largest export markets, has dampened trade sentiment. At the same time, domestic cotton prices have remained volatile, often spiking due to supply-demand imbalances and weather-related disruptions.

Easing Input Costs Across the Value Chain

The impact of this waiver ripples across the entire textile value chain. The waiver’s impact cascades through every layer of the textile ecosystem:

Spinners: Cotton is the lifeblood of yarn production. Cheaper imports stabilise yarn prices, improve utilisation, and reduce working capital stress.
Weavers & Knitters: Lower yarn costs translate into competitive fabric pricing, supporting both domestic and export markets.
Garment Manufacturers: For exporters battling Bangladesh and Vietnam, this narrows the cost gap. Competitive FOB pricing becomes achievable without compromising quality.
Consumers: Indirectly, the waiver helps contain inflation in cotton-based apparel and home textiles.

In an industry where margins are often razor-thin, even a modest dip in cotton prices can significantly improve profitability.

Rebuilding Business Confidence

Beyond the arithmetic of cost savings, the waiver delivers something equally important: confidence. Exporters view this as a morale booster at a time when uncertainty has clouded order books. With US tariffs creating headwinds, the ability to cushion input costs gives businesses breathing space to renegotiate contracts and sustain volumes. For smaller units operating on thin margins, this relief could mean the difference between continuity and closure. Lower input costs also free up cash flows, enabling companies to redirect capital toward modernisation and capacity expansion, investments that often get deferred when raw material costs spiral out of control. Confidence, in this context, becomes a competitive lever. When businesses trust their cost base, they plan better, invest more, and commit to growth with greater conviction.

Export Competitiveness and the Global Equation

The waiver also has implications for India’s export competitiveness. For years, Indian exporters have faced structural disadvantages compared to regional rivals. Bangladesh enjoys duty-free access to several Western markets due to its Least Developed Country status, while Vietnam leverages a network of free trade agreements to keep export duties low. Both countries face US duties of 20 percent, yet remain competitive because of these structural advantages. In this scenario, lowering input costs is one of the few levers India can pull in the short term to defend its market share. Cheaper yarn and fabric translate into more competitive garments and made-ups, particularly in price-sensitive markets. This move also helps Indian exporters recapture orders that might otherwise drift to lower-cost competitors. However, it is important to recognise that cost relief is temporary; structural competitiveness will require sustained modernisation, trade diplomacy, and diversification of sourcing and markets.

Textile Machinery Divisions: The Hidden Beneficiary

Interestingly, the benefits of this waiver extend beyond mills, weavers, and garment exporters. India’s textile machinery sector, which forms the backbone of the industry by providing end-to-end solutions for spinning, weaving, and finishing, also stands to gain. When raw material costs are high, discretionary spending on machinery upgrades is often the first casualty. But relief in cotton prices improves cash flows, making it easier for companies to invest in advanced spinning technologies, post-spinning machinery, and automation solutions. These investments are critical for improving efficiency, reducing wastage, and enhancing productivity. The adoption of Industry 4.0 principles such as IoT-enabled monitoring, predictive maintenance, and AI-driven quality control can transform the operating model of textile manufacturing. By enabling real-time visibility, reducing downtime, and ensuring consistent quality, these technologies help Indian manufacturers compete not just on cost, but on capability.

A Step towards Long-Term Resilience

While the current waiver is temporary, it underscores the importance of policy agility in addressing sector-specific challenges. Raw material volatility is a recurring concern for the textile industry, and long-term resilience will require a mix of strategies. Diversifying cotton sources, boosting domestic productivity through better agronomy and supply chain practices, and promoting alternative fibres such as man-made fibres and blends can reduce over-dependence on imported cotton. Policy continuity is equally critical. A predictable framework that combines short-term relief measures with long-term reforms will position India’s textile industry not just to survive, but to lead in a highly competitive global landscape. The duty waiver is more than a fiscal tweak; it is a confidence reset. It demonstrates that responsive policymaking can stabilise industries under stress and create conditions for growth. As December 31 approaches, the industry’s call for an extension will likely grow louder. Whether or not the government accedes, the move has already shown the power of targeted, timely interventions. For now, India’s textile entrepreneurs and the machinery makers who support them can breathe a little easier and stitch their future with renewed confidence. India’s textile story is at an inflection point. The combination of policy support and technology adoption can restore competitiveness and unlock growth. But the window is short. Players who act now by securing cost advantages, modernising operations, and diversifying markets will lead the next growth wave. The north star remains unchanged: move up the value chain and compete on capability, not just cost. The question is not whether India can compete; it is whether we can institutionalise agility, digitisation, and discipline to lead.