Proposed move aims to support textile manufacturers as cotton and fuel prices continue to increase

The Union government is expected to remove the 11% duty on cotton imports till October to provide relief to textile manufacturers dealing with higher input costs linked to the West Asia crisis. The proposal comes as cotton prices and fuel costs continue to rise, increasing pressure on the apparel and textile sector.

Industry representatives said cotton prices have climbed sharply in recent weeks, while manufacturers are also facing higher costs for polyester and fuel.

The Centre is likely to withdraw the 11% duty on cotton imports until October as part of efforts to ease pressure on textile manufacturers affected by increasing raw material and fuel costs amid the ongoing West Asia crisis, sources familiar with the development told The Indian Express.

The duty had previously been removed between August and September 2025 after steep US tariffs began impacting manufacturing activity and investments.

According to industry executives, cotton prices have risen by nearly 10-15% over the past month due to hoarding and stronger demand for cotton alongside other input materials, particularly polyester. Domestic fuel prices have also started moving upward as oil marketing companies pass on the rise in global crude oil prices to consumers.

India is the world’s second-largest cotton producer after China, but the country imports around 15% of its raw cotton and nearly 20% of its yarn requirements to meet domestic demand. Experts stated that cotton production in India has remained stagnant for years because of several policy-related issues, including limited adoption of new seeds, inadequate modern irrigation infrastructure, and recurring pest attacks and diseases.

Earlier this month, Apparel Export Promotion Council (AEPC) Chairman A. Sakthivel urged the government to remove the import duty, citing elevated cotton prices and increasing production costs.

In a presentation submitted to the Finance, Commerce and Industry and Textile Ministry, AEPC said India has recently entered several Free Trade Agreements (FTAs), while competing countries continue to operate with lower input costs.

“Competing apparel exporting nations can access cotton at internationally competitive prices, whereas Indian manufacturers continue to face higher raw material costs due to the prevailing import duty structure. The delegation stated that a reduction in import duty on cotton is essential to help the Indian apparel industry secure greater business opportunities from FTA partner countries and enhance India’s competitiveness in the global market,” AEPC Chairman said in a statement.

Unlike competitors such as Bangladesh and Vietnam, India is also among the largest cotton-producing countries, making farmer interests a significant factor in decisions related to import duties.

Apparel manufacturers said some investments that had previously begun shifting out of India due to tariffs have started returning.

An industry executive, speaking on condition of anonymity, said the sector is also witnessing investment inflows from Europe as companies attempt to diversify beyond Bangladesh.

“Bangladesh has signed an FTA with the US and is also seeking a deal with the EU, as India’s duty disadvantage will be eliminated soon when the deal comes into effect,” the executive said.