CITI welcomes extension of India's cotton duty exemption for textiles

The Confederation of Indian Textile Industry (CITI) feels the extension of the import duty exemption on cotton will provide much-needed support to the Indian textile and apparel sector currently grappling with a challenge of gargantuan proportions in the form of the 50 per cent US tariff imposed on Indian goods which came into effect on August 27.

The US is the biggest market for India’s textile and apparel exports, accounting for almost 28 per cent of the total sales of India’s textile and apparel exporters.

On August 28, it was announced that “To augment availability of cotton for the Indian textile sector, the Central Government had temporarily exempted the import duty on cotton from August 19, 2025 till September 30, 2025. In order to support exporters further, the Central Government has decided to extend the import duty exemption on cotton (HS 5201) from September 30, 2025 till December 30, 2025.”

“CITI would like to extend its deep gratitude to the Prime Minister, all other concerned authorities and different Ministries, especially the Finance, Textile, Agriculture and Commerce Ministries, for providing this lifeline to the textile and apparel sector at this critical juncture,” CITI chairman Rakesh Mehra said in a release.

“The balanced approach taken by the authorities will benefit all stakeholders in the textile and apparel value chain. It will go a long way in helping India’s textile and apparel exporters at a time when we are confronted with possibly one of the gravest crises we could have ever encountered. It would significantly contribute to raising the competitiveness of the Indian textile and apparel sector by paving the way for easier availability of a crucial raw material like cotton,” Mehra pointed out.

“From a societal perspective, this step taken by the authorities will to an extent ensure factories can run for longer and somewhat dilute the chances of immediately putting countless jobs and livelihoods at risk.”

India’s textile and apparel sector is one of the biggest generators of jobs and livelihoods in India. The combined direct and indirect employment created by the textile and apparel industry is more than 100 million. The cotton value chain, itself, provides direct employment to nearly 35 million people and dominates India’s total textile and apparel exports. India aims to more than double textile and apparel exports to $100 billion by 2030.

The removal of import duty on cotton has been a long-pending request of the Confederation of Indian Textile Industry. A CITI analysis has shown that between 2015-16 and 2024-25, cotton imports have on an average only met 5.8 per cent of the total cotton demand. There has also been limited correlation between cotton import volumes and the imposition of import duty. On the other hand, removal of tariff barriers helps in stabilising domestic prices.

For the benefit of lakhs of cotton growing farmers, India’s FY26 Budget had announced a ‘Mission for Cotton Productivity’. “This 5-year mission will facilitate significant improvements in productivity and sustainability of cotton farming and promote extra-long staple cotton varieties. The best of science C technology support will be provided to farmers. Aligned with our integrated 5F vision for the textile sector, this will help in increasing incomes of the farmers and ensure a steady supply of quality cotton for rejuvenating India’s traditional textile sector,” Union Finance Minister Nirmala Sitharaman had said in her Budget speech.

ALCHEMPro News Desk (HU)