Government balances textile industry competitiveness with enhanced MSP support for cotton farmers
The Indian textile industry is expected to benefit from the Ministry of Finance’s decision to temporarily exempt Customs duties on cotton imports, a move aimed at addressing supply challenges and supporting the sector amid global market volatility.
The government has announced a waiver of all Customs duties on cotton imports from June 1 to October 31, 2026. The duty was previously set at 11%, and the five-month exemption has been welcomed by industry stakeholders as a measure to ease trade-related pressures and stabilise the textile value chain. The announcement follows the recent revival of the RoDTEP scheme and is being viewed as another significant support measure for the sector.
The duty exemption is expected to reduce input costs for yarn, fabric, and garment manufacturers. Industry observers note that if the cost savings are effectively passed through the value chain, both manufacturers and consumers could benefit from improved pricing.
Access to quality cotton remains a key factor in maintaining the competitiveness of Indian textile manufacturers in international markets. While domestic cotton production supports much of the industry’s requirements, certain specialised cotton varieties preferred by global brands are often sourced through imports. The duty waiver is expected to improve access to such varieties, enabling manufacturers to meet specific quality requirements without replacing locally produced cotton.
The measure is also expected to support small and medium enterprises as well as export-oriented units by helping improve cost competitiveness and potentially facilitating the revival of international orders affected by high raw material costs.
India’s textile and apparel value chain supports approximately 45 million people, making uninterrupted raw material availability a critical factor for employment and production continuity. The policy is expected to contribute to industrial stability while supporting the production of higher-value garments under the government’s Make in India initiative.
Concerns regarding the impact of duty-free imports on domestic cotton farmers are being addressed through existing support mechanisms. The government continues to operate the Minimum Support Price (MSP) system through the Cotton Corporation of India Ltd. (CCI) to safeguard farmer incomes.
For the 2026-27 marketing season, the Cabinet Committee on Economic Affairs has increased the MSP for cotton by ₹557 per quintal. The revised MSP has been fixed at ₹8,267 per quintal for medium-staple cotton and ₹8,667 per quintal for long-staple cotton. These rates are intended to ensure that farmers continue to receive remunerative prices despite the temporary duty exemption on imports.
Industry experts also note that imported cotton is primarily used for specialised applications and niche export requirements, reducing direct competition with the standard cotton varieties cultivated by most Indian farmers.
The extension of the duty waiver until October is expected to provide greater certainty for production planning across the textile industry. By combining lower-cost access to imported cotton with higher MSP support for domestic producers, the policy seeks to balance the interests of manufacturers and farmers while strengthening India’s position in the global textile market.
The views expressed are those of Dr Vidhu Sekhar P, Assistant Professor at National Institute of Fashion Technology, Daman Campus.
