Budget 2025:Textile industry body demands raw materials at competitive Prices, removal of cotton import duty

The Indian Textile & Apparel Industry, in its pre-budget memorandum, has demanded ensuring the availability of raw materials at internationally competitive prices. Indian domestic raw material prices are significantly higher than international prices.

The industry body stated that while competitors like Bangladesh and Vietnam have free access to such raw materials, India has imposed QCO on MMF fibre/yarn, acting as a non-tariff barrier on the imports of such raw materials and thus affecting their free flow. It has resulted in a shortage of some specialised fibre/yarn varieties and also impacted domestic prices.

It demanded the removal of import duty from the cotton fibre of all varieties, stating that the Indian cotton industry is importing specialised varieties of cotton, such as contamination-free, organic cotton, sustainable cotton, etc., which are not available domestically. The import duty that was imposed to safeguard the interest of farmers is not serving its intended purpose, rather hurting the domestic cotton textile value chain.

The industry body suggested carrying out cotton purchase operations on Minimum Support Price (MSP) through a Direct Benefit Transfer (DBT) mode and demanded the Cotton Price Stabilisation Fund Scheme to enable the industry to overcome this issue of price volatility.

The industry body added ‘At present the textile mills can avail working capital only for three months from the banks, due to which mills usually procure 3 months of cotton stock at the start of the season when the cotton prices are usually cheaper. For the remaining months, the mills source cotton from the traders and CCI, whose cotton prices vary according to the market conditions; thus it becomes difficult for the mills to plan their production schedule effectively. To enable the industry to overcome this issue of price volatility, the government may consider coming up with a Cotton Price Stabilisation Fund Scheme’.

The industry body said that the fund should be comprised of 5 percent interest subvention or loan at the NABARD interest rate (cotton being an agricultural commodity), a credit limit period from three months to eight months, and a reduction in the margin money for cotton working capital from 25% to 10%. The industry also requested the government to exempt certain categories from the Quality Control Orders (QCOs) to enable the industry to cater to the niche market based out of such product categories.