The Centre’s decision to extend the cotton import duty exemption until December 31 gives India’s textile industry temporary relief from a raw-material squeeze, but the figures cited by the Southern India Mills’ Association show why the policy debate is larger than a short-term tax measure. The association says domestic production is falling below industry requirements, while low productivity and demand for specialised cotton continue to push manufacturers towards imports.
For Coimbatore and other textile-producing centres, cotton availability is not an isolated commodity issue. It influences yarn and fabric costs, export commitments, factory utilisation and employment across a production chain that includes spinning, weaving, processing and garments. SIMA has welcomed the extension of the exemption on the 11% import duty, arguing that it will help mills address shortages, stabilise prices and fulfil export orders.
The policy provides immediate cost relief because cotton is a major component of textile production. According to SIMA president Palanisamy, cotton accounts for about 70% of yarn manufacturing cost, 50% of fabric cost and 30–35% of garment cost. That cost structure means a change in the landed price of cotton can move through the entire value chain, affecting the competitiveness of Indian products in domestic and international markets.
SIMA’s case is built around a widening gap between supply and demand. The association said India’s cotton output fell from 398 lakh bales in 2013-14 to an estimated 280 lakh bales in 2026-27, while industry requirements are around 360 lakh bales. It also pointed to exports of 12–15 lakh bales of organic and Better Cotton Initiative cotton, which it said further tighten domestic availability. On those estimates, SIMA projected a potential shortage of about 100 lakh bales.
These numbers, as presented by the industry association, describe a market in which domestic production is not matching the needs of textile manufacturers. The resulting pressure is not limited to the price paid by mills. Shortages can also affect the ability of manufacturers to plan production, secure export orders and enter into longer-term supply arrangements with global buyers. SIMA said assured access to cotton at internationally competitive prices is necessary to leverage opportunities arising from recent and ongoing free trade agreements, including those with the United Kingdom, the European Union and the United States.
The exemption’s immediate importance is also reflected in the volume of imports recorded during the previous season. SIMA said the industry imported about 72 lakh bales during the 2025-26 season under temporary duty exemptions. The association said these imports helped mitigate shortages, avoid job losses and fulfil export orders. The extension therefore continues an intervention that the industry regards as operational support rather than merely a tariff adjustment.
However, the policy also exposes a structural tension in India’s textile strategy. Import duty protection can support domestic producers, but when local supply is insufficient or does not match the quality and staple requirements of mills, the same duty can raise input costs for downstream manufacturers. SIMA said India would continue to depend on imports for extra-long staple cotton and cotton from customer-specified origins. In those segments, the question is not simply how much cotton India produces, but whether it produces the varieties required by modern textile supply chains.
This distinction matters for export-oriented manufacturing. Global brands and overseas buyers often require consistent specifications, reliable delivery and stable pricing. If Indian mills cannot secure the required cotton domestically, import access becomes part of their ability to compete. SIMA has argued that removal of cotton import duty is necessary for sustained growth and for signing long-term contracts with global brands. Its position links tariff policy directly to the commercial planning horizon of manufacturers.
At the same time, SIMA is not presenting imports as a complete solution. It said self-sufficiency in medium and long staple cotton could take seven to ten years, while dependence on imports would continue for extra-long staple and customer-specified cotton. The association’s appeal to the Prime Minister is for duty-free imports of all cotton varieties until 2030, followed by a review of the policy.
That request points to the limits of short extensions. A measure that runs only until December 31 can reduce immediate uncertainty, but it does not by itself provide the multi-year visibility needed for mills to negotiate supply contracts, plan investments or make production decisions. The association has therefore proposed periodic reviews based on domestic supply, demand and price trends, rather than relying only on temporary interventions.
The wider employment dimension strengthens the policy’s urban and regional significance. SIMA said the cotton-based textile industry provides employment to more than 45 million people, with a significant share located in rural areas and women accounting for around half the workforce. The industry’s performance therefore connects industrial towns such as Coimbatore with surrounding rural economies, where cotton cultivation, textile employment and related services support household incomes.
The association also linked cotton policy to the Ministry of Textiles’ stated ambition of raising textile trade from about $172 billion to $350 billion, increasing exports from $36 billion to $100 billion, attracting $100 billion in investment and creating 20 million jobs. SIMA said meeting those targets would require between 475 lakh and 500 lakh bales of cotton at internationally competitive prices. The figures are industry projections and targets cited in the report, but they illustrate the scale of raw-material demand implied by the proposed expansion.
The productivity issue makes the supply challenge more difficult. SIMA said Indian cotton productivity is about 430–440 kilograms per hectare, compared with a world average of 815 kilograms per hectare and more than 1,500 kilograms per hectare in over 20 countries. If accurate, this gap means that increasing textile production cannot depend only on expanding the area under cotton. It also requires higher output from existing land, although the supplied report does not specify which interventions would deliver that improvement.
The figures also reveal a policy conflict between upstream protection and downstream competitiveness. A duty on imports may be intended to support domestic cotton producers, while textile mills face the cost of securing adequate and suitable fibre. When domestic output is below industrial requirements, the burden of protection can move downstream to spinning, weaving and garment manufacturing. The exemption shifts that balance temporarily in favour of users of cotton, but it does not resolve how growers, ginners, mills and exporters should share the benefits and risks of price changes.
For policymakers, the central administrative challenge is therefore to keep decisions responsive to market conditions without creating unpredictable rules. SIMA’s call for periodic reviews of supply, demand and prices suggests a mechanism based on measurable indicators. Such a framework could distinguish between ordinary domestic availability and specific shortages involving extra-long staple, organic, Better Cotton Initiative or customer-specified cotton. The source report does not establish whether the government has accepted this proposal.
The Centre’s extension is consequently best understood as breathing room rather than a final settlement. It addresses the immediate concern raised by mills, but the association’s own evidence points to deeper issues: falling output, a projected shortage, low productivity, specialised import dependence and the need for long-term export contracts. The policy will have to be assessed not only by whether it lowers the cost of imported cotton until December 31, but also by how it fits into India’s longer-term plans for production, productivity and textile employment.
What the available evidence confirms is that cotton import duty has become an important lever in the competitiveness of India’s textile industry. What remains unresolved is whether temporary exemptions can coexist with a durable strategy for improving domestic productivity and ensuring the varieties required by manufacturers. The next significant policy milestones will be the government’s decision on the exemption after December 31 and its response to SIMA’s request for duty-free imports through 2030.
