The report, titled ‘Economic Analysis of Cotton Supply, Pricing, and Trade Policy in India’, examines the structural challenges affecting cotton production, pricing, trade policy, and the wider textile value chain. It calls for stable and predictable access to imported cotton, particularly during supply shortages, while also recommending measures to improve fibre quality and productivity.
A Gherzi-ICAC study released by CITI said India’s 11 per cent cotton import duty is hurting the global competitiveness of the textile and apparel sector and called for a stable, predictable import policy.
The report recommended duty-free access during shortages, strategic cotton reserves, and reforms to improve productivity and fibre quality.
CITI chairman Ashwin Chandran said in a press conference, “The Gherzi-ICAC report presents a detailed and implementable roadmap for stakeholders to realise the ambitious $350 billion target that we have for the textile and apparel industry by 2030, including exports worth $100 billion by the end of this decade.” He added that a “key takeaway from the report is its central message: a thriving textile and apparel industry can be the farmer’s strongest customer in keeping with the 5F vision.”
The study noted that temporary policy relief has had limited impact. India had waived cotton import duty between August and December 2025 before reinstating it from January 1, 2026.
“A stable and predictable policy is imperative to allow the mills to sustain their operations and fulfil the market demand. There is a need to withdraw import duty on cotton and allow the mills to have access to cotton at competitive prices,” the report said, adding that competing Asian textile-producing countries enjoy duty-free access to global cotton supplies.
The report estimated that the Cotton Corporation of India (CCI) would require an annual buffer of around ₹1,500 crore to supply nearly 100 lakh bales of cotton to domestic mills at internationally competitive prices, offsetting the 11 per cent import duty disadvantage.
It also recommended that CCI maintain a strategic cotton reserve equivalent to around three months of domestic consumption to reduce supply volatility, similar to reserve mechanisms followed by countries such as China.
“There would also be a need for CCI to sustain a dynamic selling policy to meet the current requirement of the mills through its warehouses in upcountry locations near major textile clusters,” the report stated.
On productivity, the study stressed the need for long-term structural reforms in India’s cotton sector. It highlighted stagnant yields as a major concern, noting that lower productivity increases per-unit production costs and weakens farmer profitability.
“The long-term policy considerations should address the fundamental constraints faced by the cotton sector for improving productivity to ensure economic viability of this strategic crop for the growers,” the report said.
The study also proposed the creation of a Cotton Price Stabilisation Fund with 5 per cent interest subvention support to reduce working capital pressure during the peak procurement season from November to March.
India’s textile and apparel exports declined 2.2 per cent year on year to $35.79 billion in fiscal 2025-26, underlining the mounting pressure on the sector amid rising raw material costs and intensifying global competition.
Separately, the Southern India Mills’ Association (SIMA) welcomed the Union Cabinet’s approval of the Mission for Cotton Productivity (MCP), or ‘Kapas Kranti’, with a ₹56.59 billion ($595.28 million) outlay through 2030–31, calling it a timely initiative to revive India’s cotton sector and strengthen the competitiveness of the textile industry. SIMA chairman Durai Palanisamy said the mission would help improve productivity, fibre quality, mechanisation, pest management, and research-led innovation while reducing dependence on imported Extra Long Staple (ELS) cotton. He noted that India’s cotton productivity remains below that of major producers such as Brazil and China and emphasised that nearly 80 per cent of the country’s textile exports are cotton-based, underlining the strategic importance of the mission for achieving the goal of building a $350 billion textile economy by 2030.
Fibre2Fashion News Desk (KUL)
