• Import duty relief: Raw material accounts for more than 60% of total costs, making the removal of the 11% import duty critical to match the competitiveness of peers in Vietnam, Bangladesh, and China. Removing the duty would bring the landed cost of imported cotton slightly below or on par with domestic prices.
• Cotton-to-yarn spread: Spreads for the benchmark 30s count are currently running at Rs 120 to Rs 125, which is improved compared to last year, though an increased minimum support price and potential supply shortages pose future margin risks.
• Domestic supply deficit: India is facing a raw material shortfall, with domestic cotton crop production estimated at roughly 290 lakh bales against a demand of 320 to 330 lakh bales.
• Duty removal outlook: The Textile Ministry is supportive of duty removal to achieve global raw material parity, while the final decision rests with the Finance and Agriculture ministries.