Textile Industry Seeks Removal Of Cotton Import Duty Amid Rising Raw Material Costs

(MENAFN- KNN India) New Delhi, May 8 (KNN) India's textile industry has intensified its demand for the removal of the 11 percent import duty on cotton, arguing that elevated raw material costs are hurting competitiveness at a time when global demand remains uncertain and input pressures are rising.

A study released by the Confederation of Indian Textile Industry (CITI) said the duty has made imported cotton expensive for domestic mills, especially during periods of supply tightness, and has pushed domestic cotton prices above international benchmarks for the past few years.

Supply Gap Raises Cost Pressures

According to the report, India's cotton production is projected at 29.1 million bales in 2025–26, while domestic consumption is estimated at 32.8 million bales, creating a supply gap of nearly 3.7 million bales. A similar deficit of 2.5 million bales was recorded last year as consumption outpaced production.

Industry stakeholders said this mismatch has significantly increased costs for spinning mills and exporters. Domestic cotton prices have remained above the global Cotlook A Index since 2024, reversing India's earlier advantage of lower-priced cotton compared to global markets.

The report warned that if this trend continues, India's cotton yarn exports could decline by 20–25 percent, potentially leading to annual export losses of USD 0.5–1.2 billion, reported the Economic Times.

Investment And Capacity Utilisation Hit

The sector has also flagged weakening investment sentiment. Shipments of new ring spindles reportedly declined to around 900,000 units in 2024, compared with more than 2 million units in both 2022 and 2023.

Nearly 14–15 million ring spindles, representing about 25 percent of India's installed spinning capacity, are currently lying idle due to poor margins and weak competitiveness.

Textile manufacturers have additionally been hit by rising yarn prices. In major textile hubs such as Tirupur and Surat, yarn prices have surged sharply in recent months due to higher cotton costs, strong overseas demand, and increased processing expenses. Fabric prices have already risen by Rs 10–25 per metre in some segments.

Industry Pushes For Immediate Relief

The demand for duty relief has gained urgency amid disruptions linked to the ongoing West Asia conflict, which has also increased logistics costs and prices of petrochemical derivatives used in synthetic fibres.

The Ministry of Textiles is reportedly examining temporary duty reductions in consultation with the Finance and Agriculture ministries.

At the same time, the Centre has approved a Rs 5,659 crore Mission for Cotton Productivity aimed at improving yields, quality and long-term domestic cotton availability.

While the industry has welcomed the move, it maintains that immediate duty relief is needed to address short-term supply shortages and restore export competitiveness.

(KNN Bureau)

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