The textile industry has expressed serious concerns over a steep increase in cotton prices observed over the past two months, combined with a tightening domestic supply. These factors, along with rising raw material and logistics costs, could adversely impact the sector, which was already hard hit by US tariffs last year.
Industry Leaders Warn of Cotton Shortage
Neeraj Jain, managing director of Vardhman Textiles, raised alarms about domestic supply during the company's latest earnings call. He flagged the risk of a cotton shortage beginning in August. Similarly, during an analyst call, Arvind Ltd's management stated that higher input costs, particularly from cotton prices, could exert pressure on margins in the first half of the year. The company has proactively locked in long-term prices and secured a significant portion of raw materials to manage the inflationary environment.
Demand for Duty Exemption
Exporting units of various sizes and industry bodies have urged the Union Government to provide an exemption from the 11% cotton duty at least until December. This demand comes amid a sharp rise in prices and a weakening rupee. Manufacturing units argue that the price hike increases costs and makes them less competitive compared to other key hubs.
Dr A Sakthivel, vice chairman of the Apparel Export Promotion Council, noted, "Many competing Asian countries, such as Bangladesh and Vietnam, have zero duty access. A sustained domestic supply gap and higher prices force Indian textile manufacturers and exporters to battle higher input costs, especially at a time of growing orders from key markets. Some of the units cannot accept orders with certainty." This severely impacts Indian units' flexibility and erodes their market share in price-sensitive markets and segments, he added.
Supply Deficit and Hoarding Allegations
Domestic cotton production is projected to drop to 291 lakh bales against consumption demand of 328 lakh bales, leaving a deficit of 37 lakh bales, according to a report by the Confederation of Indian Textile Industry (CITI). Dr K Venkatachalam from the Tamil Nadu Spinning Mills Association stated that the supply crunch is more severe than headline figures indicate and alleged hoarding by traders. He emphasized that it would take 45 days to get imports and urged the government to make efforts to import cotton on time before it becomes an acute shortage.
Export Decline
Apparel exports declined 11.66% on a yearly basis in April 2026, while combined textile and apparel exports declined 3.42%, as per Texprocil data. The industry remains under pressure from multiple fronts, including high input costs and global trade uncertainties.
