Indian Textile Industry Calls for Cotton Import Duty Removal and Strategic Reserve

The Confederation of Indian Textile Industry (CITI) has urged the Indian government to eliminate the 11% import duty on cotton and establish a strategic cotton reserve. This plea comes amidst a significant divergence between domestic and international cotton prices, which CITI warns could severely impact the nation's textile export earnings. According to a CITI report, the persistent price disparity threatens to reduce yarn exports by an estimated 20-25%. Such a decline would translate into an annual loss of up to $1.2 billion in textile export revenue, placing considerable strain on an industry crucial for employment and foreign exchange. The industry's concerns stem from elevated domestic cotton prices, which make Indian textile products less competitive in the global market. While international prices have softened, domestic prices remain buoyed by various factors, including supply-chain dynamics and local demand. The 11% import duty exacerbates this issue, making imported cotton – a necessary input for many textile manufacturers – more expensive and further eroding profit margins for exporters. Establishing a strategic cotton reserve, as advocated by CITI, would aim to stabilize domestic prices and ensure a consistent supply for the textile sector, particularly during periods of volatility or scarcity. This measure could help mitigate future price shocks and provide a buffer against global market fluctuations. The proposed policy changes are intended to restore the competitiveness of Indian textile exports, protect jobs within the sector, and safeguard the country's position in the global textile trade.