Government's challenge before budget on cotton import duty
By yash chouhan 2026-01-19 18:26:29
Ahead of the Budget, Central Government Under Pressure Over Cotton Import Duty
Farmers oppose reduction, textile industry insists on removal
Ahead of the upcoming 2026-27 budget, the central government is caught between conflicting demands from farmers and the textile industry regarding import duties on cotton. In February 2021, the government imposed an 11 percent import duty on cotton to protect domestic farmers, which includes basic customs duty, agricultural infrastructure cess, and surcharge.
The textile industry argues that the duty should be removed due to declining domestic production and quality constraints affecting competitiveness. Farmers' organizations, however, contend that cotton prices have already fallen from ₹57,000 to ₹52,500 per candy, and a reduction in the duty would further impact their income.
According to sources, the government has received representations from both sides, but given the current weak cotton prices, an immediate reduction or removal of the duty is unlikely. A government official said, “Cotton prices have fallen and farmers' income has been affected, so a reduction in the duty is not likely.”
The Confederation of Indian Textile Industry (CITI) argues that removing the import duty would help bridge the production gap and boost export competitiveness. The organization recently met with Agriculture Minister Shivraj Singh Chauhan to demand the permanent removal of the duty.
Cotton production in India is the livelihood base for approximately six million farmers and 40 to 50 million people employed in the textile sector. The textile and apparel sector is one of the country's largest employers, directly employing over 45 million people.
Pressure has also increased on the export front. Exports have been impacted since mid-2025 after the US imposed a 50 percent tariff on Indian textiles. In December 2025, textile and apparel exports registered a meager 0.4 percent year-on-year growth. In conclusion, the issue of cotton import duties has become a balancing act for the central government — weighing farmers' interests against the competitiveness of the textile industry.
