CAI seeks scrapping of India's 11% cotton duty to protect industry

The Cotton Association of India (CAI) said the industry is passing through one of its worst phases, with high domestic cotton prices preventing Indian mills from benefitting from free trade agreements (FTAs) with partner countries.

High MSP, low domestic productivity and elevated input costs have made Indian cotton significantly more expensive than global prices. As a result, mills are unable to compete with international suppliers, while spinners and fabric manufacturers face continuous margin pressure. The 11 per cent duty, introduced during COVID-19, has outlived its purpose and is now distorting the market, the CAI said in a press release.

CAI warned that the industry’s distress has also begun affecting cotton traders and ginners, with delayed payments and rising bad debts across the value chain. The association noted that the only sustainable solution is to ensure the availability of competitively priced raw cotton, which requires urgent duty removal.

The press release further stated that India’s textile exports are suffering due to global recessionary conditions and uncertainty in Europe. CAI said that if raw cotton imports become costlier after December 2025, unemployment, loan defaults and financial stress across mills could intensify.

The association also linked duty removal to policy goals, noting that the Textile Ministry’s target of achieving $100 billion in textile and apparel exports by 2030 will only be feasible if mills receive raw material at competitive rates. It added that India historically had zero import duty on cotton with no adverse impact on farmers.

CAI cited abnormal seasonal rains this year, which damaged cotton quality and forced mills to depend more heavily on imports. If the duty is not removed permanently, the association cautioned that buyers may shift to rival manufacturing hubs such as Vietnam, Bangladesh, Pakistan and other markets—leading to a long-term loss of India’s global market share.

CAI president Vinay N Kotak urged the government to intervene immediately, stating that permanent removal of the 11 per cent duty is critical for the survival of the entire cotton and textile value chain. The association concluded that only with competitive raw cotton can India fully utilise FTAs, attract global orders and strengthen its position in the textile supply chain.

ALCHEMPro News Desk (KUL)