CITI urges reduction in textile import duties

PSF was priced at Rs 76.82 per kg internationally in October 2024, while the domestic price stood at Rs 97.3 per kg, marking a 26.64 per cent premium.

As India approaches Budget 2025, concerns have emerged within the textile industry over its diminishing global market share, attributed to rising costs and reduced competitiveness. The Confederation of Textile Industry of India (CITI) has highlighted these issues in a memorandum submitted to the government, pointing out that domestic raw material prices are considerably higher than global rates. Specifically, polyester staple fibre (PSF) and viscose staple fibre (VSF) were reported to be 26.64 per cent and 11.98 per cent more expensive, respectively.

According to CITI’s data, PSF was priced at Rs 76.82 per kg internationally in October 2024, while the domestic price stood at Rs 97.3 per kg, marking a 26.64 per cent premium. This price differential has fluctuated between 26.64 per cent and 36.31 per cent over the past seven months. Similarly, VSF was priced at Rs 141.10 per kg globally but cost Rs 158 per kg domestically, with the price difference ranging from 11.98 per cent to 18.42 per cent during the same period.

CITI emphasised that high domestic raw material prices, compounded by competitors like Bangladesh and Vietnam enjoying unrestricted access to such materials, place India at a disadvantage. The imposition of quality control orders (QCO) on man-made fibres (MMF) and yarns has been described as a non-tariff barrier hindering imports and exacerbating shortages of specialised fibres and yarns, thereby inflating domestic prices.

The organisation warned that the escalating costs are undermining the competitiveness of downstream textile products. Given that this segment has the highest employment elasticity within the textile value chain, the livelihoods of millions are at risk.

CITI recommended liberalising import policies and reducing the basic customs duty (BCD) on MMF fibres, filaments, and essential chemicals such as PTA and MEG, essential for producing raw materials. The removal of import duties on cotton was also reiterated to ensure competitive pricing and stable supply.

Although the government has already excluded cotton of staple length exceeding 32.0 mm from import duties, this covers only 37 per cent of total imports. The remaining 63 per cent still faces duties, adversely impacting the domestic cotton textile sector. The duty, initially intended to protect farmers, is reportedly failing to serve its purpose and instead harming the industry.

The memorandum noted that specialised cotton varieties such as contamination-free, organic, and sustainable cotton—unavailable domestically—are being imported to meet international quality standards. The cotton industry, predominantly comprising small and marginal farmers, faces additional challenges. Limited working capital forces the industry to maintain minimal inventories and rely heavily on traders during the off-season. These traders often set prices based on import parity, making domestic cotton more expensive than international cotton.

Throughout the year, Indian cotton fibre prices were observed to be 15-20 per cent higher than international rates, negatively impacting the competitiveness of downstream value-added cotton textile products.