West Asia crisis: Govt waives import duty on cotton till October 30
This is the second time in the last 12 months that the duty has been removed.
The government on Saturday announced removal of 11% duty on cotton starting June 1 till October 30 to boost cotton availability for India’s textile industry amid the ongoing West Asia crisis.
This is the second time in the last 12 months that the duty has been removed.
A similar relief measure was extended to the industry last year after the US imposed steep tariffs on Indian exports.
The Ministry of Textiles said that the temporary duty exemption is expected to reduce input costs across the textile and apparel sector, thereby providing a targeted relief to manufacturers and consumers, while also keeping the interests of domestic farmers in mind.
“Overall, the measure is anticipated to have a positive impact on the performance of the domestic textile industry, especially the small and medium enterprises, ensuring better availability of cotton in the market,” the ministry said.
The government move comes after industry executives highlighted that the price of cotton has surged nearly 10-15% during the last month alone due to hoarding, as cotton demand picked up in line with other input materials, particularly polyester.
Domestic fuel prices have also begun to rise as the oil marketing companies have started passing on the surge in global crude oil prices to consumers.
Apparel Export Promotion Council (AEPC) Chairman A Sakthivel had earlier this month asked the government to eliminate the duty due to high cotton prices and rising input costs.
In a presentation made to the Finance, Commerce and Industry and Textile Ministry, AEPC said that India has recently entered into several Free Trade Agreements (FTAs), but competing countries have lower input costs.
Mithileshwar Thakur, Secretary General AEPC said, “The temporary exemption of Customs duty and Agriculture Infrastructure and Development Cess on Cotton imports from June 1, 2026 to October 30, 2026 will lead to reduction of input costs across the textile and apparel sector besides improving the availability of cotton, thereby providing much-needed relief to the downstream industry, which have been facing challenges due to the sharp increase in cotton and yarn prices.”
Confederation of Indian Textile Industry (CITI) said import duty was resulting in costs going up across the value chain and having a detrimental impact on scaling India’s textile and apparel exports. India’s textile exports are dominated by cotton.
India is the second-largest cotton producer after China, but relies on imports for about 15% of its raw cotton and about 20% of its yarn to meet demand.
India’s cotton production has been declining, with experts blaming it on a range of policy failures. They said that cotton production has stagnated for years largely due to a lack of new seeds, modern irrigation facilities, and frequent pest attacks and diseases.
Unlike several other competitors, such as Bangladesh and Vietnam, India is one of the largest producers of cotton and farmers’ interests weigh on the duty-related decision.
Apparel manufacturers have said that some investments that had begun going out of the country due to tariffs have started to come back.
An industry executive, who did not wish to be named, said the sector is also seeing European investments coming into India as they are trying to diversify away from Bangladesh.
“Bangladesh has signed an FTA with the US and is also seeking a deal with the EU, as India’s duty disadvantage will be eliminated soon when the deal comes into effect,” the executive said.
AEPC said that the textile industry’s cotton requirement for the current year is projected at around 337 lakh bales, while cotton arrivals for the 2025-26 season are estimated at only 292.15 lakh bales, resulting in a supply-demand gap of nearly 45 lakh bales.
The shortfall is expected to increase pressure on spinning mills and downstream textile industries due to rising input costs and limited availability of quality raw material, the Export Promotion Council said.
The government on Saturday announced removal of 11% duty on cotton starting June 1 till October 30 to boost cotton availability for India’s textile industry amid the ongoing West Asia crisis.
This is the second time in the last 12 months that the duty has been removed.
A similar relief measure was extended to the industry last year after the US imposed steep tariffs on Indian exports.
The Ministry of Textiles said that the temporary duty exemption is expected to reduce input costs across the textile and apparel sector, thereby providing a targeted relief to manufacturers and consumers, while also keeping the interests of domestic farmers in mind.
“Overall, the measure is anticipated to have a positive impact on the performance of the domestic textile industry, especially the small and medium enterprises, ensuring better availability of cotton in the market,” the ministry said.
The government move comes after industry executives highlighted that the price of cotton has surged nearly 10-15% during the last month alone due to hoarding, as cotton demand picked up in line with other input materials, particularly polyester.
Domestic fuel prices have also begun to rise as the oil marketing companies have started passing on the surge in global crude oil prices to consumers.
Apparel Export Promotion Council (AEPC) Chairman A Sakthivel had earlier this month asked the government to eliminate the duty due to high cotton prices and rising input costs.
In a presentation made to the Finance, Commerce and Industry and Textile Ministry, AEPC said that India has recently entered into several Free Trade Agreements (FTAs), but competing countries have lower input costs.
Mithileshwar Thakur, Secretary General AEPC said, “The temporary exemption of Customs duty and Agriculture Infrastructure and Development Cess on Cotton imports from June 1, 2026 to October 30, 2026 will lead to reduction of input costs across the textile and apparel sector besides improving the availability of cotton, thereby providing much-needed relief to the downstream industry, which have been facing challenges due to the sharp increase in cotton and yarn prices.”
Confederation of Indian Textile Industry (CITI) said import duty was resulting in costs going up across the value chain and having a detrimental impact on scaling India’s textile and apparel exports. India’s textile exports are dominated by cotton.
India is the second-largest cotton producer after China, but relies on imports for about 15% of its raw cotton and about 20% of its yarn to meet demand.
India’s cotton production has been declining, with experts blaming it on a range of policy failures. They said that cotton production has stagnated for years largely due to a lack of new seeds, modern irrigation facilities, and frequent pest attacks and diseases.
Unlike several other competitors, such as Bangladesh and Vietnam, India is one of the largest producers of cotton and farmers’ interests weigh on the duty-related decision.
Apparel manufacturers have said that some investments that had begun going out of the country due to tariffs have started to come back.
An industry executive, who did not wish to be named, said the sector is also seeing European investments coming into India as they are trying to diversify away from Bangladesh.
“Bangladesh has signed an FTA with the US and is also seeking a deal with the EU, as India’s duty disadvantage will be eliminated soon when the deal comes into effect,” the executive said.
AEPC said that the textile industry’s cotton requirement for the current year is projected at around 337 lakh bales, while cotton arrivals for the 2025-26 season are estimated at only 292.15 lakh bales, resulting in a supply-demand gap of nearly 45 lakh bales.
The shortfall is expected to increase pressure on spinning mills and downstream textile industries due to rising input costs and limited availability of quality raw material, the Export Promotion Council said.
