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Cotton Duty Cut: How an 11% Exemption Boosted India's Textile Industry

The government's move to exempt an 11% import duty on cotton has successfully lowered domestic prices for the textile industry. This policy has made raw materials more affordable for manufacturers while international prices also trended downward. At the same time, the Minimum Support Price mechanism ensures farmers are protected from market volatility and receive fair returns. Increased cotton imports, particularly from the USA, are helping to meet the quality and volume demands of India's large textile sector.

Key Points: Cotton Import Duty Exemption Cuts Costs for Textile Industry

  • Domestic cotton prices fell from Rs 57,000 to around Rs 52,500 per candy after the duty exemption
  • MSP for farmers increased by Rs 589 per quintal for the 2025-26 season
  • Cotton imports surged to 41.40 lakh bales to bridge the domestic demand-supply gap
  • The Cotton Corporation of India procured 31.19 lakh bales worth Rs 13,492 crore under MSP operations
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Import duty exemption on cotton has cut cost for textiles industry: Minister

Minister reveals 11% cotton import duty exemption has lowered domestic prices, benefiting the textile sector while MSP continues to protect farmers' incomes.

"The exemption of 11 per cent import duty on cotton has led to a softening of domestic prices... ensuring affordability for the textiles industry while MSP-based support continues to protect farmers. - Minister Pabitra Margherita"

New Delhi, Dec 19

The exemption of 11 per cent import duty on cotton has led to a softening of domestic prices, currently ranging between Rs 51, 500–Rs 52, 500 per candy, ensuring affordability for the textiles industry while MSP-based support continues to protect farmers, the Parliament was informed on Friday.

Minister of State for Textiles Pabitra Margherita, in a written reply to a question in the Rajya Sabha, said that since the duty exemption, international prices of equivalent S-6 cotton declined from about 79.15 US cents per pound prior to August 19, 2025, to around 73.95 US cents per pound in December 2025, indicating a downward global trend.

Domestic cotton prices have softened correspondingly from about Rs 57,000 per candy to around Rs 52,500 per candy, broadly in line with international price movements. Domestic prices are influenced by global and domestic demand-supply conditions, exchange rate and quality considerations, while cotton imports constituted about 13.93 per cent of total domestic consumption during the 2024–25 season, he added.

Margherita said that the government supports cotton farmers through the Minimum Support Price (MSP) mechanism, which provides a minimum of 50 per cent return over the cost of production. For the 2025–26 season, MSP has been fixed at Rs 7,710 per quintal for medium staple and Rs 8,110 per quintal for long staple cotton, an increase of Rs 589 per quintal over 2024–25. To prevent distress sales, the Cotton Corporation of India (CCI) has procured about 31.19 lakh bales worth Rs 13,492 crore under MSP operations as on December 11, 2025, through 570 procurement centres across 149 districts in 11 states.

The minister said that the cotton imports from the USA have increased to meet the quality and supply requirements of the domestic textile industry, which consumes about 94 per cent of India’s cotton. During August–September 2025, including the period after the temporary exemption of the 11 per cent import duty, imports from the US aligned with industry needs. Overall, cotton imports in India rose from 15.20 lakh bales in 2023-24 to 41.40 lakh bales in 2024-25, helping bridge the demand–supply gap.

These imports ensure the availability of specialised cotton varieties and support export-oriented production, thereby enhancing the global competitiveness of India’s textile sector, the minister pointed out.

The CCI procures cotton under MSP to ensure remunerative prices for farmers. MSP operations continue to safeguard farmers against price volatility and ensure fair returns, he added.

- IANS

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Reader Comments

P
Priya S
Good move. The price drop from ~57k to 52.5k per candy will help small and medium textile units survive. The industry was struggling with high raw material costs. Hope this benefit is passed on.
R
Rohit P
I appreciate the government thinking about farmers with the MSP increase. But we must ensure CCI procurement is efficient and timely. Sometimes farmers in remote areas don't get the full benefit.
S
Sarah B
Interesting data. Imports nearly tripled from 15.2 to 41.4 lakh bales. While it helps the industry, long-term focus should be on improving domestic cotton yield and quality to reduce dependence.
K
Karthik V
As someone from a textile hub, this news is a big relief. Cheaper cotton means we can compete better with Bangladesh and Vietnam. The key is sustaining this policy to attract investments.
M
Meera T
The MSP safety net is essential, but the real issue is the cost of production for farmers. A Rs 589/quintal increase is okay, but input costs (seeds, fertiliser) have risen much more. Need a holistic view.

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