Textile Industry Welcomes Temporary Exemption of Cotton Import Duty Until October 31, 2026
Industry bodies say duty relief will improve access to quality cotton, stabilise input costs and support export competitiveness
The textile value chain has acknowledged the Government of India's decision to exempt raw cotton imports from the 11% customs duty and agriculture cess for the period June 1 to October 31, 2026.
The Ministry of Finance, through a notification issued on May 30, 2026, exempted the 5% Basic Customs Duty, 5% Agriculture Infrastructure and Development Cess (AIDC) and 10% Social Welfare Cess on imports of raw cotton, amounting to a total effective duty relief of 11%.
According to industry representatives, the exemption comes at a time when Indian textile and apparel exporters are witnessing increased export opportunities due to changing global sourcing patterns and recently concluded Free Trade Agreements (FTAs). They noted that the industry has simultaneously been facing shortages of quality cotton and a continuing gap between domestic and international cotton prices.
The temporary exemption enables textile and apparel manufacturers to source quality cotton from international markets during the off-season at competitive prices. The Southern India Mills Association (SIMA), The Cotton Textiles Export Promotion Council (TEXPROCIL) and the Confederation of Indian Textile Industry (CITI) have appealed to spinning mills to pass on the benefits by rationalising yarn prices. According to the associations, stabilised yarn prices would help exporters benefit from emerging FTAs.
Cotton accounts for nearly 65% of yarn production costs and 25–30% of garment and home textile manufacturing costs. Industry representatives stated that reliable availability and stable pricing of cotton are essential for exporters operating under long-term contracts and supply-nominated business arrangements.
According to the industry, India is currently facing a cotton shortage of 40–50 lakh bales. Cotton production has remained around 290 lakh bales during the last two cotton seasons, compared with the industry's estimated requirement of 330–350 lakh bales of 170 kgs each. While India accounts for around 38% of the world's cotton cultivation area, it contributes approximately 19% of global production due to productivity levels of 430 kgs/hectare, compared with an average of 1,000 kgs/hectare in the rest of the world.
Industry representatives stated that achieving self-sufficiency in cotton production could take 7–10 years through the implementation of the Mission for Cotton Productivity, which has been allocated Rs.5659 Crores. They cited technology adoption, obtaining approvals from the Genetic Engineering Appraisal Committee (GEAC), conducting field trials, introducing improved seed varieties, defoliants, mechanisation, and contamination-free cotton production as key factors influencing the timeline.
At a press meet held today, Mr. Ashwin Chandran, Chairman, CITI, Mr. Ravi Sam, Vice-Chairman, TEXPROCIL, Mr. Durai Palanisamy, Chairman, SIMA, Mr. S Krishnakumar, Deputy Chairman, SIMA, and Dr. K. Selvaraju, Secretary General, SIMA, expressed their appreciation to Hon'ble Prime Minister Shri Narendra Modiji, Smt Nirmala Sitharaman, Hon'ble Minister for Finance, Shri Shivraj Singh Chouhan, Hon'ble Minister for Agriculture and Farmers' Welfare, Shri Piyush Goyal, Hon'ble Minister for Commerce & Industry, and Shri Giriraj Singh, Hon'ble Minister for Textiles, for the decision to remove the 11% import duty on cotton. They also noted that Shri Giriraj Singh had strongly recommended removal of the duty, stating that it had minimal impact on farmers as they are protected through the Minimum Support Price (MSP).
The industry representatives also acknowledged Hon'ble Chief Minister of Tamil Nadu Thiru C Joseph Vijay, stating that he wrote a D.O. Letter to the Hon'ble Prime Minister shortly after assuming office, recommending the immediate removal of the 11% import duty on cotton.
The office-bearers of the industry associations stated that uninterrupted availability of quality cotton and customer-specified cotton is essential for the predominantly cotton-based textile industry, which provides employment to 8 Crores rural people, particularly women.
They further noted that major textile-exporting countries, including Bangladesh, Vietnam, Pakistan, Indonesia and Turkey, allow duty-free cotton imports, enabling manufacturers in those countries to procure raw materials at globally competitive prices. According to the associations, the current decision helps create a more level competitive environment for Indian textile manufacturers.
The associations also acknowledged the Government's long-term initiatives to improve domestic cotton productivity through the Mission for Cotton Productivity (MCP) and other technological interventions. They stated that while these initiatives are expected to improve cotton production over time, the temporary import duty exemption provides immediate support to the industry during the transition period.
The industry representatives also expressed appreciation for the Government's response and stated that they look forward to continued engagement with the Government on strengthening India's global textile competitiveness.