CITI Calls for Permanent Scrapping of Cotton Import Duty in Budget 2026
The Confederation of Indian Textile Industry has made a strong appeal to the government. They want the 11 percent import duty on cotton removed permanently in the upcoming Union Budget for 2026. The industry body warns that this levy is creating severe cost pressures. It is also damaging the global competitiveness of India's textile and apparel manufacturers.
Meeting with Agriculture Minister
A delegation from CITI met Union Agriculture Minister Shivraj Singh Chouhan last week. During this meeting, they sought his direct intervention. Their request focused on the permanent removal of import duty on all varieties of cotton. The industry body officially announced this development on Monday.
India's textile sector holds a critical position in the economy. It is the country's second-largest employment generator. This industry relies heavily on stable access to high-quality cotton. A persistent gap between demand and supply has plagued the sector for some time.
Recent Policy Changes and Current Situation
The government had previously extended an import duty exemption on cotton. This exemption was valid until December 31, 2025. Textile associations across the country welcomed this move at the time.
However, the situation changed at the start of this year. No further notification was issued by the authorities. Consequently, the 11 percent duty automatically came back into effect from January 1, 2026. CITI states that this reinstatement will negatively impact the sector's competitiveness.
Minister Chouhan provided assurances to the delegation. He promised that their concerns would receive careful examination during the official review process.
Declining Domestic Production and Import Reliance
The industry body also raised an alarm about domestic cotton production. They highlighted a steady decline in output. Projections indicate this year's production could fall to its lowest level in nearly two decades. This intensifies existing worries about supply shortages.
CITI argues that reimposing the import duty will make cost pressures worse for manufacturers. They provided data from the past decade. India's average cotton imports have remained around 20 lakh bales annually. This volume accounts for approximately 6.8 percent of the average domestic production.
Imports serve specific purposes, according to the industry. They are largely driven by quality requirements and precise specifications. These imports cater to specialised needs and back-to-back export orders. Importantly, they do not displace or replace domestic cotton in the market.
Global Competitive Disadvantage
CITI drew attention to a significant competitive issue. Other major textile-exporting nations operate under different rules. Countries like Bangladesh and Vietnam allow duty-free cotton imports. This gives them a structural cost advantage in international markets. Indian manufacturers struggle to compete on price because of this disparity.
Broader Challenges Facing the Sector
This demand from CITI arrives at a difficult time for the textile and apparel industry. The sector is one of India's largest sources of employment and livelihoods. It is currently facing fresh headwinds from international trade policies.
A 50 percent tariff imposed by the United States will become effective on August 27, 2025. This adds another layer of challenge for exporters. Cotton-based products form the dominant portion of India's textile exports.
The United States holds a crucial position for Indian textile exporters. It is the single-largest export destination for these goods. Nearly 28 percent of total export revenues come from the US market.
Industry data reveals the scale of this trade relationship. Exports to the United States were valued at close to 11 billion dollars in the financial year 2024-25. The combination of domestic duty issues and international tariffs creates a complex challenge for the industry's future growth and stability.
