How the Indian Government's Cotton Import Duty Exemption Will Transform the Textile Industry

Government's Strategic Move to Boost Cotton Availability

New Delhi: The Indian government's recent decision to waive all customs duties on cotton imports for a period of five months, ending on October 30, aims to ensure a steady supply of cotton for the textile sector, reduce production costs, and enhance the competitiveness of Indian textiles, as stated by the Textile Ministry on Saturday.

Industry representatives have praised this initiative, calling it a "much-needed relief" for the apparel industry.

According to the Apparel Export Promotion Council (AEPC), this policy is expected to improve cotton availability for the textile and apparel sectors, providing essential support to the entire supply chain.

The Finance Ministry confirmed that this exemption will take effect starting June 1, 2026.

The Textile Ministry emphasized that this initiative, introduced during the off-season for cotton, will not only ensure sufficient cotton supply for the textile industry but also assist micro, small, and medium enterprises (MSMEs), lower input costs, and enhance the competitiveness of Indian textiles while protecting farmers' interests and maintaining market stability.

AEPC Chairman A Sakthivel noted that this decision will particularly aid small and medium enterprises that have been struggling with rising cotton and yarn prices.

He highlighted the urgency of removing customs duties on cotton imports to help stabilize domestic cotton prices.

Sakthivel urged spinning mills to pass on the benefits of reduced cotton costs by adjusting yarn prices, which would help stabilize the entire textile supply chain and allow garment exporters to secure and fulfill export orders more competitively in the near future.

In light of ongoing global market fluctuations, Ashwin Chandran, Chairman of the Confederation of Indian Textile Industry (CITI), remarked that the previous 11 percent import duty on cotton was a significant barrier to enhancing the global competitiveness of the Indian textile and apparel sector, especially since major Asian competitors enjoy duty-free access to cotton.

Chandran added that the cotton import duty was inflating costs throughout the supply chain and negatively impacting efforts to boost India's textile and apparel exports.

With cotton being a dominant factor in India's textile exports, the country aims to achieve USD 100 billion in textiles and apparel exports by 2030.

Chandran also pointed out that this temporary relief from the cotton import duty will enable Indian textile and apparel exporters to capitalize on opportunities arising from Free Trade Agreements (FTAs).