With cotton yarn prices up 60% in 2026 and domestic output falling for a sixth consecutive year, mills want the current tariff waiver extended well beyond the October harvest.
India’s textile and apparel industry is pressing the government to extend duty-free cotton imports for another six months beyond October 31, 2026, arguing that high fibre and yarn prices are eroding export competitiveness.
The government currently exempts raw cotton under HS 5201 from customs duty and the Agriculture Infrastructure and Development Cess from June 1 through October 31, 2026. Without the exemption, imported cotton normally attracts an effective duty of around 11%.
Yarn costs squeeze garment exporters
The Tiruppur Exporters’ Association says cotton yarn prices have risen around 60% during 2026, while raw-cotton prices are about 20% higher. Yarn accounts for roughly 60% of garment raw-material cost, making the increase particularly damaging for apparel exporters competing on tightly negotiated prices.
India’s cotton crop has meanwhile declined to around 29 million 170-kg bales in 2025/26, down 2.35% year on year and more than 17% below 2021/22 levels. Cotton production has now fallen for six consecutive years.
Industry groups argue that sustained access to internationally priced cotton is increasingly important as India seeks to exploit new trade agreements and compete with sourcing bases such as Bangladesh and Vietnam, where cotton imports are generally not subject to equivalent duties.
Farmers fear harvest-time pressure
The proposal creates an obvious policy conflict. India’s new cotton crop begins arriving from October, and growers fear continued duty-free imports could depress domestic prices just
as they bring produce to market.
Industry representatives counter that international cotton is unlikely to be substantially cheaper than domestic fibre and that additional imports would primarily improve availability rather than trigger a price collapse.
The government’s decision will therefore test how India balances farmer protection against downstream export competitiveness. For mills and garment exporters, policy certainty matters almost as much as the tariff itself: short exemption windows make cotton procurement, yarn pricing and forward export contracting considerably harder.
