Textile Industry Association Advocates for Permanent Elimination of Cotton Import Duty in Budget 2026
The Confederation of Indian Textile Industry (CITI) has called on the Indian government to permanently eliminate the 11 percent import duty on cotton in the upcoming Union Budget for 2026. This request comes amid concerns that the duty is increasing cost pressures and undermining the global competitiveness of domestic textile and apparel manufacturers. A delegation from CITI recently met with Union Agriculture Minister Shivraj Singh Chouhan to discuss the issue, emphasizing the need for stable access to high-quality cotton to support the industry.
Concerns Over Import Duty Impact
CITI has expressed significant concerns regarding the reinstatement of the 11 percent import duty on cotton, which was reintroduced on January 1, 2026, following a temporary exemption that lasted until December 31, 2025. The textile industry, which is the second-largest employment generator in India, relies heavily on consistent access to high-quality cotton. The organization warned that the reimposition of the duty would negatively affect the competitiveness of India’s textile and apparel sector, particularly as the industry grapples with a persistent demand-supply gap.
During the meeting with Minister Chouhan, CITI representatives highlighted the potential adverse effects of the import duty on manufacturers. The minister assured the delegation that their concerns would be thoroughly reviewed in the upcoming discussions regarding the budget.
Declining Domestic Cotton Production
CITI has also raised alarms about the steady decline in domestic cotton production, which is projected to reach its lowest level in nearly two decades this year. This decline exacerbates concerns over supply shortages within the industry. The organization noted that over the past decade, India’s average cotton imports have been around 20 lakh bales, representing approximately 6.8 percent of the average domestic production.
The imports are primarily driven by quality and specification needs, catering to specialized requirements and export orders, and do not compete with domestic cotton. CITI argues that the reintroduction of the import duty would further intensify cost pressures for manufacturers, making it increasingly difficult for them to operate competitively in both domestic and international markets.
Global Competitiveness and Export Challenges
CITI pointed out that competing textile-exporting countries, such as Bangladesh and Vietnam, allow duty-free cotton imports, which provides them with a structural cost advantage in the global market. This competitive edge is crucial as the Indian textile and apparel sector faces additional challenges, including a 50 percent tariff imposed by the United States, effective August 27, 2025.
Cotton-based products are a significant component of India’s textile exports, with the U.S. being the largest destination for these goods. In fact, nearly 28 percent of India’s total textile and apparel export revenues come from the U.S., which amounted to close to $11 billion in the fiscal year 2024-25. The imposition of tariffs and the ongoing import duty on cotton could jeopardize these vital export revenues, further stressing the industry.
Call for Government Action
In light of these challenges, CITI is urging the government to take immediate action to remove the import duty on cotton permanently. The organization believes that doing so would not only alleviate cost pressures on manufacturers but also enhance the global competitiveness of India’s textile and apparel sector. As the industry continues to navigate these turbulent waters, the outcome of the government’s budget decisions will be crucial for its future sustainability and growth.
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