India May Extend Duty-Free Cotton Imports Until December to Ease Textile Industry Costs
New Delhi, October 27, 2026: India is expected to extend its duty-free cotton import policy by another two months, until the end of December 2026, as rising domestic cotton prices and lower crop output prospects put pressure on the textile industry, according to government and industry sources.
The proposed extension would allow textile mills to import cotton without paying the existing 11% customs duty, potentially reducing raw material costs, increasing supply and improving the competitiveness of Indian textile manufacturers in global markets.
Rising Cotton Prices Drive Demand for Extension
The Indian government had waived the 11% import duty on cotton for five months, from June 1 to October 31, 2026, to improve availability during the lean supply season. However, domestic cotton prices have remained firm despite the arrival of the new cotton season in October.
Cotton prices in India are reportedly above ₹9,000 per 100 kg, exceeding the government’s minimum support price (MSP) of ₹8,717 for the new season. Patchy monsoon rainfall and concerns over lower production have contributed to the price pressure.
Following inter-ministerial consultations, the government is expected to issue an order extending the duty exemption through at least December 31, 2026. The extension has not yet been officially confirmed.
Domestic Cotton Supply Faces a Shortfall
Trade estimates indicate that India’s cotton production could fall below 29 million bales in the 2026–27 season, while domestic demand is expected to exceed 34 million bales. This potential gap could increase reliance on imported cotton to meet the requirements of spinning mills and other textile manufacturers.
According to Dipanshi Agarwal, principal analyst at S&P Global, lower domestic output, a stock-to-use ratio of around 31%—the lowest in five years—and strong textile demand support the case for extending the exemption.
However, increased imports could also put downward pressure on domestic cotton prices, affecting farmers’ earnings.
US, Brazil and Australia Could Benefit
An extension of the duty-free period could encourage additional cotton purchases from major international suppliers, including the United States, Brazil and Australia.
India’s cotton imports rose 63% year-on-year to $1.1 billion during the first six months of the current financial year, from April to September, according to trade ministry data.
Nevertheless, the scale of additional imports may be limited by higher international cotton prices, elevated freight costs and the depreciation of the Indian rupee. US benchmark cotton futures have been trading above 83 cents per pound, increasing the cost of imported raw material.
Textile Industry Seeks Long-Term Policy Support
The Confederation of Indian Textile Industry (CITI) has called for the removal of cotton import duties for an extended period, arguing that the existing tax structure increases production costs and weakens India’s competitiveness against textile-exporting countries such as Vietnam and Bangladesh.
For spinning mills, fabric manufacturers and garment exporters, access to competitively priced cotton is essential to maintaining margins, managing procurement costs and meeting export orders.
A temporary extension could offer short-term relief, but industry representatives believe a longer-term policy approach would provide greater certainty for sourcing and production planning.
What the Extension Could Mean for India’s Textile Sector
If approved, the extension could have several implications:
- For textile mills: Lower import costs and improved access to raw cotton.
- For cotton farmers: Potential downward pressure on domestic market prices as imported supplies increase.
- For international suppliers: Additional export opportunities in the Indian market.
- For garment and textile exporters: Potential relief from raw material cost pressures and improved price competitiveness.
Outlook
The expected extension highlights the growing challenge of balancing the interests of cotton farmers with the needs of India’s textile manufacturing sector. While duty-free imports could help mills manage rising input costs, the longer-term solution will depend on domestic cotton productivity, crop quality, supply stability and a predictable import policy.
The government’s final decision will be closely watched by spinning mills, cotton traders, textile manufacturers and exporters as they prepare their procurement strategies for the coming months.
Note: The proposed extension remains subject to official government confirmation.
