Government considers customs duty cut on cotton imports to aid textile sector
Proposal aims to ease raw material cost pressures amid West Asia disruptions.
The government is considering reducing or removing customs duty on raw cotton imports to support the domestic textile industry as raw material prices rise amid supply chain disruptions triggered by the ongoing West Asia war.
India’s textile sector largely depends on domestically produced cotton, but imports long-staple cotton mainly from the US, Egypt and Australia, along with limited quantities from Brazil.
Bipin Menon, trade advisor in the textiles ministry, said discussions are underway with the ministry of agriculture and the department of revenue to explore the possibility of lowering or eliminating customs duty on cotton imports.
Menon also said the ministry has sought withdrawal of the 2.5% customs duty on rayon-grade wood pulp, which is used to manufacture viscose staple fibres (VSF) and filament yarn. Rayon-grade wood pulp is a purified cellulose product derived from wood and serves as a key raw material for man-made fibre production. In November 2025, the government had withdrawn the quality control order on VSF to support the sector.
However, Menon noted that the wood pulp supply constraints are not directly linked to the West Asia disruptions, and any duty change on this input may be considered later. India meets nearly half of its rayon-grade wood pulp requirement through imports from the US, Canada, Brazil and Indonesia.
The ministries are also examining whether a temporary duty reduction could be introduced during the industry’s lean season, Menon said.
Raw cotton imports currently attract a 5% basic customs duty. The government had earlier exempted cotton from import duty between August 19 and September 30, 2025, and later extended the exemption until December 31, 2025.
Menon said a monitoring cell has been formed and the ministry is conducting weekly meetings with stakeholders, including export promotion councils, domestic associations, regional clusters such as Tirupur, Surat and Pali Balotra, and state government officials.
Amit Singh, associate professor at the Special Centre for National Security Studies at Jawaharlal Nehru University, said duty relief on cotton and wood pulp could lower costs, improve margins and boost export competitiveness. “It can provide a much-needed boost to the entire textile value chain, particularly at a time when global demand remains weak,” Singh said.
India’s garment exports declined to $15.77 billion in FY26 from $15.99 billion in FY25, while the textile and apparel sector contributes around 8–10% of total merchandise exports. The government aims to raise textile exports from $35–40 billion annually to $100 billion by 2030.
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