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14 Dec 2025·Source: The Hindu
2 min
EconomyNEWS

Textile Industry Urges Removal of Cotton Import Duty

Textile Industry Urges Removal of Cotton Import Duty

Photo by Trisha Downing

The textile industry is advocating for the removal of import duties on cotton to help micro, small, and medium-scale enterprises (MSMEs) access raw materials at affordable prices. This comes as cotton production is estimated to be lower this year, and the industry faces challenges such as uncertainty in U.S. tariffs and declining fiber quality due to unseasonal rains. The industry believes removing the import duty will reduce the divergence between domestic and global cotton prices.

Key Facts

1.

Textile industry demands removal of import duty on cotton.

2.

Cotton production estimated to be lower this year.

3.

Industry seeks affordable raw materials for MSMEs.

UPSC Exam Angles

1.

Impact of import duties on domestic industries

2.

Role of MSMEs in the Indian economy

3.

Government policies related to the textile sector

4.

International trade and tariff implications

Visual Insights

More Information

Background

The Indian textile industry is one of the oldest and largest in the country, contributing significantly to the economy and employment. Cotton is a crucial raw material for the industry, and its availability and price directly impact the competitiveness of textile manufacturers, especially MSMEs.

Latest Developments

The textile industry is currently facing challenges due to lower cotton production estimates, uncertainty in U.S. tariffs, and declining fiber quality. The industry is advocating for the removal of import duties on cotton to address these challenges and ensure affordable access to raw materials for MSMEs.

Practice Questions (MCQs)

1. Consider the following statements regarding the Indian cotton textile industry: 1. India is the largest producer of cotton globally. 2. The textile industry is a significant contributor to India's export earnings. 3. Import duties on cotton are primarily intended to protect domestic cotton farmers. Which of the statements given above is/are correct?

  • A.1 and 2 only
  • B.2 and 3 only
  • C.1 and 3 only
  • D.1, 2 and 3
Show Answer

Answer: B

Statement 1 is incorrect. India is a major producer, but not always the largest. Statements 2 and 3 are correct, highlighting the industry's export importance and the rationale behind import duties.

2. In the context of the recent appeal by the textile industry to remove import duties on cotton, which of the following factors is/are likely to be the most significant driver(s) behind this appeal? 1. Anticipated decline in domestic cotton production. 2. Fluctuations in global cotton prices. 3. Increased demand for high-quality cotton from MSMEs. Select the correct answer using the code given below:

  • A.1 only
  • B.2 and 3 only
  • C.1 and 2 only
  • D.1, 2 and 3
Show Answer

Answer: D

All three factors contribute to the industry's appeal. Lower domestic production, global price volatility, and MSME demand all create pressure to reduce import costs.

3. Which of the following is NOT a likely impact of removing import duties on cotton in India?

  • A.Reduced cost of raw materials for textile MSMEs
  • B.Increased competitiveness of Indian textile exports
  • C.Potential decrease in domestic cotton prices
  • D.Increased government revenue from import duties
Show Answer

Answer: D

Removing import duties would decrease, not increase, government revenue from those duties. The other options are all plausible positive impacts.

4. Assertion (A): The textile industry's demand for the removal of cotton import duties is primarily driven by the need to support MSMEs. Reason (R): MSMEs often lack the financial resources to absorb high raw material costs, making them particularly vulnerable to import duties. In the context of the above, which of the following is correct?

  • A.Both A and R are true, and R is the correct explanation of A
  • B.Both A and R are true, but R is NOT the correct explanation of A
  • C.A is true, but R is false
  • D.A is false, but R is true
Show Answer

Answer: A

Both the assertion and the reason are true, and the reason correctly explains why the textile industry is focusing on supporting MSMEs through the removal of import duties.

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