Budget 2026: Textile industry body seeks permanent removal of cotton import duty; flags cost pressure, export risks

The Confederation of Indian Textile Industry (CITI) has urged the government to permanently remove the 11 per cent import duty on cotton in the Union Budget 2026, warning that the levy is aggravating cost pressures and hurting the global competitiveness of domestic textile and apparel manufacturers, PTI reported.A CITI delegation met Union Agriculture Minister Shivraj Singh Chouhan last week, seeking his intervention for the permanent removal of the import duty on cotton of all varieties, the industry body said on Monday.India’s textile industry — the country’s second-largest employment generator — depends on stable access to high-quality cotton. Against a persistent demand–supply gap, the government had extended the import duty exemption on cotton until December 31, 2025, a move that was welcomed by textile associations.However, with no further notification issued, the 11 per cent duty was reinstated from January 1, 2026. CITI said the move would adversely impact the competitiveness of India’s textile and apparel sector.The minister assured the delegation that the concerns raised would be carefully examined during the review process, CITI said.The industry body also flagged a steady decline in domestic cotton production, which it said is projected to fall to its lowest level in nearly two decades this year, intensifying concerns over supply shortages.CITI argued that reimposing the import duty would further aggravate cost pressures for manufacturers. It pointed out that over the past decade, India’s average cotton imports stood at around 20 lakh bales, accounting for about 6.8 per cent of average domestic production.Imports, the industry body said, are largely quality- and specification-driven, catering to specialised requirements and back-to-back export orders, and do not displace domestic cotton.CITI also highlighted that competing textile-exporting countries such as Bangladesh and Vietnam allow duty-free cotton imports, giving them a structural cost advantage in global markets.The demand comes at a time when the textile and apparel sector — one of India’s largest sources of employment and livelihoods — is facing fresh headwinds from a 50 per cent US tariff effective August 27, 2025. Cotton-based products dominate India’s textile exports.The US is India’s single-largest textile and apparel export destination, accounting for nearly 28 per cent of total export revenues. Exports to the US were valued at close to $11 billion in FY2024-25, according to industry data.