SIMA Welcomes Extension of Cotton Import Duty Exemption Until December 31, 2026

The association seeks duty-free cotton imports until 2030, citing an anticipated domestic shortage of around 100 lakh bales and the need to ensure raw material security for the textile industry.

The Southern India Mills’ Association (SIMA) has welcomed the government's decision to extend the customs duty exemption on cotton imports until December 31, 2026. SIMA Chairman Durai Palanisamy thanked the Prime Minister and the Union Ministers of Textiles, Commerce and Industry, Agriculture, and Finance for considering representations from stakeholders across the cotton textile value chain.

The exemption from the 11% import duty, which was initially applicable from June 1 to October 31, 2026, has now been extended by two months.

Cotton Supply Gap Raises Industry Concerns

India's predominantly cotton-based textile industry provides employment to more than 45 million people, particularly in rural areas, with women accounting for around 50% of the workforce.

The Ministry of Textiles has set a vision of increasing the textile trade from approximately USD 172 billion to USD 350 billion, raising exports from USD 36 billion to USD 100 billion, attracting USD 100 billion in new investments and creating 20 million additional jobs.

According to SIMA, achieving these targets will require an estimated 475–500 lakh bales of cotton, with each bale weighing 170 kg, at internationally competitive prices. The association stated that every lakh of cotton bales provides employment to one lakh people.

India produced 398 lakh bales and achieved an average productivity of 565 kg per hectare during the 2013–14 cotton season. However, production in the current 2026–27 cotton season is anticipated to be around 280 lakh bales, against an industry requirement of approximately 360 lakh bales.

SIMA also noted that India normally exports around 12–15 lakh bales of organic and BCI cotton to countries such as Bangladesh. Taking this into account, the country is likely to face a cotton shortage of around 100 lakh bales.

The association estimates that India could take seven to ten years to achieve self-sufficiency in medium and long staple cotton, while continuing to depend on imports for extra-long staple (ELS) cotton and other customer-specified origin cotton.

Cotton Prices Influence Manufacturing Costs

Cotton accounts for approximately 70% of yarn manufacturing costs, 50% of fabric manufacturing costs and 30–35% of garment manufacturing costs.

SIMA stated that ensuring a smooth supply of the required quality and quantity of cotton at internationally competitive prices is essential for the textile industry. This would help manufacturers benefit from recently concluded free trade agreements (FTAs), including those with the UK, EU and USA, as well as opportunities under the TEEM Scheme and PM MITRA Park.

The association said competitive raw material availability would also support sustained industry growth and help achieve the Government of India's textile sector vision.

SIMA Highlights Benefits of Previous Duty Exemptions

SIMA Chairman Durai Palanisamy said the industry imported around 72 lakh bales of cotton during the 2025–26 cotton season by taking advantage of temporary duty exemptions. According to him, these imports helped mitigate the cotton shortage, avoid job losses and meet export commitments.

He stated that removing cotton import duty was necessary for the sustained growth of the textile industry, particularly to enable manufacturers to enter into long-term contracts with global brands.

Palanisamy also pointed out that cotton imports were duty-free between 2008 and 2021, a period that he said ensured a win-win strategy for both cotton farmers and the textile industry.

He added that the rationale for imposing import duty existed when India was a net exporter of cotton, exporting between 30 and 70 lakh bales. From 2022 onwards, the government had to introduce temporary exemptions to address domestic shortages and prevent job losses.

Cotton Productivity and Seed Technology Challenges

SIMA highlighted several challenges affecting domestic cotton production, including restrictions on the introduction and adoption of advanced seed technologies and defoliants.

The association also pointed to difficulties in rationalising more than 2,000 approved cotton seed varieties to just 20–30 high-performing varieties, as well as challenges in matching seeds to specific soil conditions, improving soil fertility and controlling pest infestations.

More than 6 million cotton farmers need support in adopting global agronomic practices. These challenges are further compounded by increasing weather uncertainties and projections of a cotton shortage exceeding 100 lakh bales in the coming years.

Palanisamy said private seed producers would continue to face difficulties in introducing the latest technology seeds through joint ventures due to licensing issues. He added that the supply of low-yielding seeds could mean that addressing cotton productivity challenges would take several years.

According to SIMA, India's cotton productivity stands at 430–440 kg per hectare, compared with the global average of 815 kg per hectare. More than 20 countries are achieving productivity levels exceeding 1,500 kg per hectare.

SIMA Seeks Duty Exemption Until 2030

Citing the need for raw material security, SIMA Chairman Durai Palanisamy has appealed to the Prime Minister to extend the cotton import duty exemption for all varieties of cotton until 2030, with a review thereafter.

The association said a longer-term exemption could help curb price speculation, bring greater price stability, ensure a level playing field and enable the industry to take advantage of market opportunities emerging from FTAs.

SIMA has also suggested that the government periodically review domestic cotton supply and demand, along with prevailing price trends, and introduce appropriate mechanisms to safeguard the interests of all stakeholders.