The Confederation of Indian Textile Industry (CITI) has made several demands in advance of the Union Budget 2025–2026, including the removal of import duties on cotton fibre of all types, the availability of raw materials at prices that are competitive with those of other countries, and the establishment of a cotton price stabilisation fund scheme.
CITI urged in its pre-budget memorandum that raw materials be made available at prices that are competitive with those of other countries.
The domestic prices of raw materials in India are substantially higher than those outside. According to the industry group, India has imposed a QCO on MMF fibre and yarn, which is hurting the free flow of these raw materials by acting as a non-tariff barrier to imports, whilst competitors such as Bangladesh and Vietnam have unrestricted access to them. According to the report, it has affected domestic prices and caused a shortage of some speciality fibre and yarn variations.
It stated that the Indian cotton sector is importing specialised cotton varieties, such as contamination-free, organic, sustainable, etc., that are not accessible domestically and called for the abolition of import duties on cotton fibre of all kinds.
It claimed that the import tax, which was put in place to protect farmers’ interests, is really harming the domestic cotton textile value chain rather than achieving its goal. The industry group recommended using a Direct Benefit Transfer (DBT) model to conduct cotton purchasing operations on the Minimum Support Price (MSP).
To help the industry deal with this problem of price fluctuation, the industry association called for the Cotton Price Stabilisation Fund Scheme.
The body also stated that textile mills currently only have access to working capital from banks for a period of three months. As a result, mills often purchase three months’ worth of cotton stock at the beginning of the season, when cotton prices are typically lower. The mills purchase cotton from traders and CCI for the remaining months, and since their cotton prices fluctuate based on market conditions, it becomes challenging for the mills to efficiently manage their production schedule. In order to help the industry deal with price volatility, the government should think about creating a Cotton Price Stabilisation Fund Scheme.
As cotton is an agricultural commodity, the industry body stated that the fund should consist of a five percent interest subvention or loan at the NABARD interest rate, a credit limit period that is extended from three months to eight months, and a reduction in the margin money for cotton working capital from twenty-five percent to ten percent.
In order to serve the specialised market based on certain product categories, the industry also asked the government to exempt varieties of textile raw material (fibre and yarn) which are not available domestically from Quality Control Orders (QCOs).
Other considerations that the body included in its memorandum include extending the Interest Equalisation Scheme (IES) for textiles for at least 3 more years, introduction of an alternate scheme to Technology Upgradation Fund Scheme (TUFS), the announcement of a new version of the PLI scheme with a lower investment threshold and wider product coverage, introduction of a scheme for encouraging the manufacturing of Indigenous textile machinery, creating a National Textile Fund to support and grow investments in the textile sector, extending the facility of duty-free Import of specified item/goods to exporters of Made-ups and deferment of the imposition of New Section 43B(h) of the Income Tax Act, 1961
