The Confederation of Indian Textile Industry (CITI) on Thursday released a comprehensive study on India’s cotton sector jointly prepared by Gherzi and the International Cotton Advisory Committee (ICAC). The report examines the structural dynamics that shape cotton production, pricing, trade policy, and the competitiveness of the broader textile value chain.
The study titled ‘Economic Analysis of Cotton Supply, Pricing, and Trade Policy in India’ flags the adverse impact of the 11% import duty on cotton and highlights the need to ensure predictable access to imported cotton during supply gaps to highlight the longterm competitiveness of India’s textile and apparel sector. Simultaneously, it recommends enhancing fibre quality and aligning domestic market conditions with global benchmarks to support both farmers’ livelihoods and industry growth.
“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,” CITI Chairman Shri Ashwin Chandran said. “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,” Shri Chandran added.
The Gerzi-ICAC report states that ad-hoc relief from import duty has had a limited impact. Most recently, the import duty on cotton was temporarily waived from August to December 2025. It was reinstated on 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 study said, pointing out that India’s competitors in Asia have free access to international cotton without any import duty. The import duty put India at a significant disadvantage.
The study said that as a nodal institution, the Cotton Corporation of India (CCI) would need to be empowered to supply cotton to mills at internationally competitive prices. “In budgetary terms, the CCI would require a buffer of approximately Rs. 1,500 crores annually to supply about 100 Lakh bales of cotton (Shankar-6) representing about onethird of the crop, to the local textile mills at an international parity price (offsetting import duty disadvantage of 11%), i.e., US₡ 4/lb below the international price,” it said.
On the CCI, the Gherzi-ICAC report further said that the Cotton Corporation of India may consider the feasibility of keeping a strategic inventory of about three months of consumption to be used to cushion volatility. Embarking on such a step would be similar to the cotton reserve policy adopted by other major cotton-textile producing 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,” it added.
On productivity, the report recommended: “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. Policy framework for an industrial crop such as cotton, will need to take into account the interests of the entire value chain.”
The report said that increasingly, farm-level profitability is determined by productivity outcomes. “Where yields remain stagnant, per unit production costs rise, limiting the ability of farmers to benefit fully from market opportunities,” it pointed out. The Gherzi-ICAC report further said that there is a need for an institutional mechanism to stabilise cotton prices to reduce the impact of price speculation on the value chain. “A Cotton Price Stabilization Fund scheme with 5% interest subvention may be considered to mitigate working capital during peak season, for cotton procured during November–March,” it said.
The textile and apparel sector is India’s second-biggest employer and a major contributor to the GDP and exports. Textile and Apparel Exports declined 2.2 per cent in dollar terms year-on-year in FY26 to $35.79 billion.
