Ahead of Budget, Centre faces contending demands from growers, cloth exporters on cotton import duty
With the Budget for 2026 – 27 delineation closer, the Centre is caught between contending demands from ranch associations and the cloth assiduity over import duty on cotton, indeed though an immediate reduction or junking of the tax appears doubtful.
Textile manufacturers are pushing for the junking of the import duty on cotton, reinstated from January, citing falling domestic product and quality constraints that are hurting competitiveness.
ranch organisations are opposed to any similar move, pointing to a sharp decline in cotton prices and the impact on planter inflows.
The import duty on cotton is around 11 percent, including introductory customs duty, the Agriculture structure and Development Cess, and surcharges.
Sources said the government has entered representations from both sides but the prevailing weakness in cotton prices, which have fallen from roughly Rs 57,000 to about Rs 52,500 per delicacy, has made policymakers cautious of easing import checks.
“ The government has entered representations from ranch associations opposing any reduction or junking of the import duty on cotton. Cotton prices have fallen and planter inflows have been impacted, so it’s doubtful that the duty will be reduced, ” a government source said.
Drop product a growing concern
Cotton duty was first introduced in February 2021 to cover growers and discourage cheaper overseas significances.
Cotton product supports an estimated 6 million growers and around 40 – 50 million people engaged in processing and affiliated conditioning, according to the fabrics ministry.
Duty has been exempted a many times, the rearmost was valid until December 31.
before this month, a delegation from the Confederation of Indian Textile Industry( CITI) met husbandry minister Shivraj Singh Chouhan, prompting the government to permanently remove the 11 percent import duty on cotton.
The delegates said cotton product has been steadily declining and is projected to fall this time to its smallest in two decades, heightening enterprises about force dearths. They said the reimposition of the import duty would further aggravate cost pressures for companies.
During the once decade, average cotton significances have been around 20 lakh bales, constituting about 6.8 percent of India’s average domestic product.
CITI said these significances are largely driven by quality and specification conditions, feeding to specialised cotton requirements and back- to- back import orders, and do n’t displace domestic cotton.
“ The assiduity completely supports the government’s ideal of guarding growers’ interests, which are formerly effectively shielded through the Minimum Support Price( MSP) medium. The MSP for cotton has been increased by about 8 percent in the current season and is presently above prevailing request prices, icing a strong safety net for growers, indeed as the assiduity grapples with rising input costs and severe external trade headwinds, ” CITI added in a statement.
India’s cloth and vesture sector, one of the biggest employers in the country, directly provides jobs to over 45 million people and supports further than 100 million livelihoods laterally, including pastoral workers and women, the fabrics ministry 2024 – 25 periodic report said.
The sector also contributes significantly to exports, with the United States alone taking nearly 28 percent of India’s cloth exports, valued at about$ 11 billion in 2024 – 25.
The sector has been under fresh pressure sincemid-2025 after US slighted a 50 percent tariff on Indian goods.
According to rearmost sanctioned data, exports of fabrics and vesture in December 2025 grew only 0.4 percent on- time, while during April – December 2025, shipments of fabrics fell 2.2 percent time- on- time and apparels grew 2.4 percent over the same period.
