In coordination with the Department of Revenue and the Ministry of Agriculture, the Ministry of Textiles is currently evaluating a strategic reduction or total elimination of the 11 per cent import duty on raw cotton. This fiscal review follows the reinstatement of the 5 per cent Basic Customs Duty and 5 per cent Agriculture Infrastructure and Development Cess on January 1, 2026. Industry stakeholders, including the Confederation of Indian Textile Industry (CITI), argue, this levy creates an inverted duty structure, particularly impacting the high-end garment segment. With domestic cotton prices trending 10 per cent to 12 per cent higher than international benchmarks in early 2026, manufacturers face significant margin erosion while competing against zero-duty regimes in nations like Bangladesh and Vietnam.

Securing the $100 billion export roadmap

This policy deliberation is central to India’s ‘Vision 2030,’ which targets $100 billion in apparel exports. Despite logistical headwinds, the sector demonstrated resilience in FY 2025–26, with total textile exports rising 2.1 per cent to Rs 316,334.9 crore. However, the reliance on Extra-Long Staple (ELS) cotton - of which India has a domestic deficit - necessitates duty-free access to maintain the quality required for premium EU and US markets. A senior textile analyst noted, the elimination of this fiscal barrier is an operational prerequisite to stabilizing yarn prices and securing high-value global orders.

Balancing agrarian interests and industrial scale

While exporters push for liberalization, the government must balance these demands with the interests of nearly six million cotton farmers. Current estimates indicate growers are holding approximately 4 million bales in anticipation of firmer prices. A sudden influx of cheaper imports could potentially depress domestic realizations below the Minimum Support Price (MSP). To mitigate this, officials are discussing a ‘lean season’ exemption, providing a window for duty-free imports during periods of low domestic arrival. This targeted approach aims to fuel the productivity of the newly announced Mega Textile Parks without destabilizing the rural economy.

The Indian textile industry is the nation’s second-largest employer, spanning the entire value chain from fiber to high-fashion retail. Predominantly focused on cotton and man-made fiber (MMF) segments, the sector is currently undergoing a structural shift toward technical textiles and large-scale manufacturing via the PM MITRA scheme. Having transitioned from a fragmented traditional base to a globally integrated powerhouse, the industry now targets a 300% growth in export turnover by 2030, supported by newly ratified Free Trade Agreements (FTAs) with the UK and EU.