CAI Urges Govt to Scrap 11 percent Cotton Import Duty to Aid Textile Sector

• Cotton Association of India urges the government to scrap the 11% import duty on raw cotton, citing high domestic prices and declining competitiveness for textile exporters.
• CAI warns that mills face raw material shortages and higher costs, risking loss of export share to Vietnam, Bangladesh, and Pakistan.
• Industry says removing the duty will align cotton prices with global rates, stabilize supply, and support the long-term viability of India’s textile value chain.

The Cotton Association of India has demanded that the government scrap the 11 percent customs duty on raw cotton imports to save the country's textile value chain from serious threats to its competitiveness and long-term viability. According to Vinay N Kotak, President of the Cotton Association of India, the steep import duty, imposed to protect domestic growers, has become counterproductive now with declining local production and increasing MSPs, which have pushed domestic cotton prices far above the global price.

The anomaly, he said, has made it increasingly difficult for the Indian spinning mills and textile exporters to compete with their counterparts in international markets. The import duty, Mr. Kotak emphasized, is undue pressure on the already struggling textile sector facing reduced raw material availability, price volatility, and subdued global demand.

The cascading effect is across the value chain-from ginners and traders down to mill owners unable to access cotton at viable rates. It is feared that India would lose precious export market share to countries like Vietnam, Bangladesh, and Pakistan that enjoy smoother access to competitively priced cotton and are rapidly ramping up their textile manufacturing capacities.

The CAI said the removal of the import duty would consolidate prices, ensure adequate supply, and restore competitiveness to an industry supporting millions of livelihoods. On the contrary, Kotak warned that India’s textiles and apparel exports would see greater erosion without such policy intervention, thus weakening one of the most vital manufacturing sectors of the country.

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It has also revised its cotton production estimate for the 2025-26 season to 309.50 lakh bales, despite its concerns. Its latest estimate by the association reflects improved clarity from November procurement and supply data indicating increased estimated supply and domestic consumption. However, the association said improved production by itself would not be enough to overcome the structural pressures that high domestic cotton prices have created vis-a-vis global benchmarks.

The trade body made it clear that the import duty, even today, distorts market behavior as it compels mills to either reduce capacity utilization or absorb the increased cost, which in turn affects profitability. The situation is tougher for export-oriented players who have to price their products competitively in global markets. Industry stakeholders contend that a more flexible cotton import policy will ensure the long-term viability of the industry.

In view of global textile supply chains fast changing and competition increasing, the CAI opines that immediate removal of the customs duty will bring much-needed relief to the sector by aligning raw material costs with global prices and enabling Indian manufacturers to retain their presence in key international markets.

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