India’s textile industry has welcomed the Government of India’s decision to temporarily exempt import duty on raw cotton, calling it a timely measure that will improve raw material availability, stabilize yarn prices, and strengthen the country’s export competitiveness.
The Ministry of Finance, through a notification issued on May 30, 2026, has exempted the 11% customs duty and agriculture cess on raw cotton imports from June 1 to October 31, 2026. The exemption includes 5% Basic Customs Duty (BCD), 5% Agriculture Infrastructure and Development Cess (AIDC), and 10% Social Welfare Surcharge, offering immediate relief to textile manufacturers grappling with rising input costs and limited domestic cotton availability.
The announcement has been widely appreciated by the textile value chain, including The Southern India Mills’ Association (SIMA), The Cotton Textiles Export Promotion Council (TEXPROCIL), and The Confederation of Indian Textile Industry (CITI).
Industry Welcomes Government’s Decision
Industry leaders expressed gratitude to Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman, Agriculture Minister Shivraj Singh Chouhan, Commerce & Industry Minister Piyush Goyal, and Textiles Minister Giriraj Singh for introducing the temporary duty exemption during the cotton off-season.
The associations noted that the decision comes at a crucial time as India experiences growing export opportunities driven by global supply chain diversification and recently concluded Free Trade Agreements (FTAs). However, the shortage of quality cotton and higher domestic cotton prices compared to international markets had been reducing the competitiveness of Indian textile exporters.
Relief for Cotton-Based Manufacturing
Cotton remains the backbone of India’s textile industry, accounting for nearly 65% of yarn production costs and 25–30% of garment and home textile manufacturing costs. Industry representatives stated that stable access to competitively priced cotton is essential for exporters operating under long-term contracts, where raw material price fluctuations directly impact profitability and delivery schedules.
The temporary duty exemption is expected to allow spinning mills to source high-quality imported cotton at competitive prices while encouraging the rationalization of yarn prices across the supply chain.
SIMA, CITI and TEXPROCIL have jointly urged spinning mills to pass on the benefits of lower cotton procurement costs to downstream manufacturers, enabling apparel exporters to remain globally competitive.
Domestic Cotton Shortage Continues
Industry estimates indicate that India’s annual cotton requirement stands between 330 and 350 lakh bales, while domestic production has remained around 290 lakh bales over the past two seasons, resulting in a shortage of nearly 40–50 lakh bales.
Despite accounting for around 38% of the world’s cotton cultivation area, India contributes only about 19% of global cotton production due to relatively low productivity of 430 kg per hectare, compared to nearly 1,000 kg per hectare in many competing countries.
Industry leaders believe it will take 7–10 years for India to achieve self-sufficiency in cotton production through the Government’s Mission for Cotton Productivity (MCP), which has been allocated ₹5,659 crore. The mission aims to improve productivity through better seed technologies, mechanization, contamination-free cotton production and advanced farming practices.
Tamil Nadu Chief Minister Also Appreciated
The industry also acknowledged the proactive role played by Tamil Nadu Chief Minister Thiru C. Joseph Vijay, who reportedly became the first Chief Minister to formally recommend the removal of the 11% cotton import duty to the Prime Minister soon after assuming office.
According to industry representatives, his intervention highlighted the urgent need to support the cotton-based textile sector, particularly in Tamil Nadu, which remains India’s largest textile manufacturing hub.
Competing Countries Already Allow Duty-Free Cotton Imports
Industry associations pointed out that several major textile-exporting countries—including Bangladesh, Vietnam, Pakistan, Indonesia, and Turkey—already allow duty-free cotton imports, enabling their textile industries to procure raw materials at globally competitive prices.
The temporary exemption, they said, helps create a level playing field for Indian manufacturers competing in international markets.
Industry Sees Both Short-Term Relief and Long-Term Opportunity
While welcoming the Government’s long-term efforts to boost domestic cotton production through productivity enhancement programmes, industry leaders emphasized that the temporary import duty exemption provides immediate support during the current supply shortage.
The associations reiterated their commitment to working closely with the Government to strengthen India’s position as a globally competitive textile manufacturing and export hub.