To boost India’s textile and apparel (T&A) industry, the government is considering tax
incentives, including reducing or removing the 10% total customs duty on imported organic
and long-staple cotton. This is significant since T&A makes up 10-11% of India’s exports and
employs over 45 million people, 60% of whom are women.
The upcoming Budget decisions will impact the economy, especially small and medium
enterprises (MSMEs), which make up 80% of textile manufacturers. Reducing the duty on
imported cotton could stabilize prices and benefit the industry amid global geopolitical
issues, economic crises in key markets, and fluctuating raw material costs.
Other potential measures include increasing the customs duty on imported man-made fibre
spun yarn from 5% to 10% and establishing a national textile fund for technological
advancement. The industry also seeks a revised Production Linked Incentive (PLI) scheme
with lower investment thresholds and the inclusion of cotton products.
Key industry demands include competitive pricing for cotton, polyester, and viscose fibres,
lifting Quality Control Orders (QCOs) on man-made fibres, and concluding free trade
agreements with the UK, EU, New Zealand, and the Gulf Cooperation Council. Additionally,
replacing the underutilized Amended Technology Upgradation Fund Scheme (ATUFS) with
an effective alternative could further support industry growth and exports.
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