The Indian textile industry is being positioned for a stronger export cycle through trade agreements, tax changes and public support, but its recovery remains tied to a basic constraint: the availability and price of cotton. An assessment reported by Dinamalar, quoting South Indian Mills Association president Durai Palanisamy, argues that India’s textile manufacturers cannot compete consistently in global markets unless raw-material costs become more predictable.
The issue is important for Tamil Nadu because the state accounts for about one-third of India’s textile production, according to the industry assessment cited in the report. It is also a question of employment and regional industrial resilience. The report says the textile sector provides work to 110 million people nationally and that 6 million farmers depend on cotton cultivation. It further states that more than 300 spinning mills have closed in Tamil Nadu over the past decade.
These figures were presented by an industry representative and are not independently verified in the supplied material. They nevertheless point to the scale of the relationship between agriculture, manufacturing and exports. A disruption in cotton supply does not remain confined to farms or mills. It can affect yarn production, fabric manufacturing, garment exports and the employment ecosystems built around textile clusters.
## The competitiveness problem begins with the raw material
According to Palanisamy’s assessment, Indian textile producers have faced a disadvantage because domestic raw-material prices have remained high. He contrasted India’s fibre mix with that of China, Bangladesh and Vietnam, saying those countries use approximately 80% synthetic fibre and 20% cotton, while Indian production remains more dependent on cotton. The report does not provide an independent comparison of these national fibre mixes, but the industry argument is clear: a cotton-heavy production base becomes vulnerable when domestic cotton prices rise above globally competitive levels.
The export numbers cited in the report show why the industry considers the problem persistent. Palanisamy said India recorded textile exports of $36 billion 12 years ago and remains at a similar level today. He also said ready-made garment exports totalled $17 billion, with more than $12 billion dependent on cotton. These figures are presented as evidence that the sector has not achieved the export expansion expected from its manufacturing base.
The supply position has also changed. India previously exported about 5 million bales of cotton, while it now imports 7.5 million bales, according to the industry statement. Domestic cotton production, the report says, has declined from 40 million bales annually to 29 million bales. The industry expects demand to reach 36.5 million bales in 2027. The supplied report does not specify the measurement year or the precise definition of a bale in each cited estimate, so these numbers require careful interpretation. Even so, the direction of the argument is unmistakable: domestic supply is being described as insufficient for expected industrial demand.
This creates a policy tension. Cotton import restrictions can support domestic producers under some market conditions, but they can also raise costs for mills that need globally priced fibre to fulfil export orders. Palanisamy’s position is that import duties should be removed permanently, rather than suspended only temporarily. He said India had no such duty between 2008 and 2021 and argued that the current structure can allow multinational companies to reduce prices during the harvest season, hurting farmers while also affecting the industry.
## Trade agreements cannot solve a cost problem alone
The report links the raw-material debate to India’s effort to expand duty-free market access. It says agreements with the United States and Europe are part of the export strategy, while work is under way to establish duty-free arrangements with 50 countries. The stated national target is to take the textile market to $300 billion and textile exports to $100 billion by 2030.
Trade agreements can reduce the tariff disadvantage faced by Indian exporters in destination markets. They can make garments, yarn or fabric more competitive against products from countries with better market access. But a lower export tariff does not automatically compensate for expensive cotton, weak productivity or an unsuitable fibre mix. The industry’s argument is therefore that market access and input-cost reform must move together.
For Tamil Nadu, this distinction is especially significant. The state’s textile economy includes spinning, weaving, processing and garment production, with industrial clusters dependent on continuous access to fibre, power, labour, finance and export orders. When mills close, the effect is not limited to the factory itself. It can weaken local supplier networks and reduce demand for transport, maintenance, trading and other services connected to manufacturing. The report does not quantify these secondary effects, but the industrial structure described in the article makes the connection evident.
The past decade of closures cited in the report also raises a governance question: whether policy support is reaching firms before financial stress becomes irreversible. Tax reform, export promotion and technology programmes may improve conditions, but their impact depends on timing, eligibility and implementation. A policy that exists on paper but is difficult for smaller mills to access will have a different effect from one that reaches a broad base of producers.
## What the policy response is trying to change
Palanisamy said textile-sector-related taxes that had created pressure were removed and that the Goods and Services Tax structure was revised following industry representations. The current GST rate for textiles was identified in the report as 5%. These claims are attributed to the industry leader; the supplied material does not include the relevant government notifications or a detailed tax analysis.
The report also says that the Union government allocated Rs 5,659 crore in the latest Budget to improve cotton production. It refers to planned or forthcoming initiatives covering skill development, pollution control and technological expansion. Central and state governments are also described as providing opportunities for participation in international textile exhibitions.
These measures address different points in the textile chain. Cotton support is aimed at the farm and raw-material base. Skill development is intended to strengthen labour capacity. Pollution-control measures are relevant to processing units, where environmental compliance can require substantial investment. Technology expansion can affect productivity and product quality. Export exhibitions, meanwhile, are intended to connect firms with international buyers.
The policy challenge is coordination. A mill cannot benefit fully from export access if it cannot source cotton at a competitive price. A farmer may not benefit from higher production if market conditions and import policy create unpredictable price signals. A processing unit may face a different constraint from a spinning mill. The report’s central message is therefore not simply that government support is increasing, but that support needs to work across the entire textile value chain.
## Tamil Nadu’s industrial future is tied to cotton policy
The textile debate also illustrates how agricultural policy can shape urban and industrial economies. Tamil Nadu’s textile centres depend on a manufacturing system that begins outside the city, with cotton cultivation, and extends through mills, processing units, warehouses, transport networks and export facilities. Changes in cotton availability can therefore influence employment and industrial activity in both urban and semi-urban locations.
The industry’s proposed solution—removing the cotton import duty—would redistribute some of the risks in the supply chain. It could make imported cotton more accessible to mills, especially when domestic production is below demand. At the same time, the consequences for farmers, domestic prices and public revenue would need to be assessed through official data and policy documents, which are not included in the supplied report.
The larger question is whether India can expand its textile exports without resolving the mismatch between its production structure and its raw-material supply. The industry assessment suggests that the answer will depend on more than signing trade agreements or changing GST rates. It will require reliable cotton availability, competitive input prices, appropriate fibre diversification, technology investment and effective implementation of support schemes.
The evidence supplied confirms that the textile sector is at a policy crossroads rather than simply entering an assured revival. The government and industry have identified trade access, taxation, cotton production, skills, pollution control and technology as areas requiring action. What remains uncertain is how the proposed measures will be implemented, how the cited production and export targets will be measured, and whether they will reduce the cost pressures that have weakened mills. Those outcomes will determine whether Tamil Nadu’s textile base becomes a platform for renewed growth or remains exposed to the same supply-side pressures that have marked the past decade.
