- CAI presses govt for duty removal to protect textile competitiveness
- Calls focus on sustaining raw material availability and export growth
The Cotton Association of India (CAI) has formally urged the Government of India to permanently remove the 11% customs duty on raw cotton imports, advocating free trade to support the textile industry. The association’s press release highlights that while cotton imports are currently duty-free only until 31 December 2025, the underlying 11% levy distorts prices and undermines competitiveness for Indian textile manufacturers and spinning mills.
CAI stated that the Indian textile sector is facing severe stress due to high domestic cotton costs driven by lower productivity and elevated MSPs, compounded by global uncertainties like US tariff volatility and weak demand in Europe. He argued that the duty makes Indian raw cotton relatively more expensive compared with international alternatives, forcing mills to depend on costly imports when quality is poor due to unseasonal rains, and further elevating input costs for downstream producers.
CAI’s appeal frames duty removal as essential not only to stabilising prices and improving supply competitiveness but also to protect jobs and reduce financial stress across the cotton textile value chain. The association warned that if the duty persists after the current temporary exemption ends, global buyers may shift orders to Vietnam, Bangladesh, Pakistan and other hubs, potentially leading to lost market share and rising unemployment, loan defaults, and bad debts in India’s textile ecosystem.
The CAI also linked the duty removal to wider policy goals, noting that India’s target of $100 billion in textile exports by 2030 hinges on access to competitive raw materials. Historically, India maintained zero customs duty on cotton before the COVID-19 pandemic, with no reported adverse effects for farmers — and with farmers already protected through MSP, the CAI argues that now it is time to offer similar safeguards to the textile sector and spinning mills.
Outlook
If the government heeds CAI’s call and permanently removes the 11 % duty, it could lower raw material costs for textile and spinning mills, help stabilise domestic cotton prices, and strengthen export competitiveness. Conversely, failure to act could widen the cost gap with competing producers and risk losing export orders — especially critical amidst external tariff pressures and slower global demand — potentially shaping Indian cotton trade dynamics and industry profitability into 2026 and beyond.
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