The Cotton Association of India (CAI) and the Southern India Mills Association (SIMA) have intensified their call for the permanent removal of the 11 per cent import duty on raw cotton as the industry enters the FY26-27.

While a temporary exemption supported the sector through late 2025, the restoration of the 5 per cent Basic Customs Duty (BCD) and 5 per cent Agriculture Infrastructure and Development Cess (AIDC) is creating an inverted duty structure that penalizes high-end garment manufacturers. Industry data for April 2026 indicates, domestic cotton prices remain 10 per cent to 12 per cent higher than international benchmarks, largely due to a decline in domestic pressing estimates, which the CAI recently revised to 320.50 lakh bales for the 2025-26 season.

Bridging the supply-quality gap for global competitiveness

The demand for duty-free access is driven by the textile industry's need for extra-long staple (ELS) cotton and specific grades not currently produced in sufficient quantities within India.

Manufacturers argue, the 11 per cent levy acts as a barrier to fulfilling high-value export orders from the US and EU, particularly as regional competitors like Vietnam and Bangladesh benefit from zero-duty regimes. Maintaining this duty restricts our ability to utilize Free Trade Agreements effectively and prevents Indian mills from functioning as global manufacturing hubs, states a senior textile analyst. The industry estimates, a permanent waiver would stabilize yarn prices and assist in recovering the $18 billion RMG export trajectory, which has faced headwinds from rising logistics and energy costs.

Mitigating risks to the $100 billion export roadmap

As the Ministry of Textiles targets a $100 billion export milestone by 2030, the availability of competitively priced raw material is a critical operational prerequisite. Analysts warn, without duty-free imports, the sector faces an increased risk of order diversion to rival manufacturing clusters. CAI emphasizes, historically, India maintained a zero-duty regime without adversely impacting domestic farmers, as imports primarily satisfy the deficit in high-quality fiber requirements. Ensuring raw material neutrality is now viewed as the primary lever for the 1,200 large-scale spinning and weaving units seeking to modernize their operations under the upcoming Bharat Tex 2026 initiatives.

Established in 1921, the Cotton Association of India is the premier body representing the interests of the entire cotton value chain, from ginners to textile mills. The association provides essential crop estimates, quality testing, and policy advocacy. It currently manages the world’s largest cotton testing network and is instrumental in aligning Indian fiber standards with global ISO and ASTM protocols to support the $350 billion national textile market goal.