India has extended its 11% cotton import duty exemption by two months as weaker domestic production prospects and firm fibre prices increase pressure on spinning mills and textile exporters.
India has officially extended duty-free raw cotton imports until December 31, 2026, providing additional relief to textile manufacturers facing high raw-material costs and uncertain domestic supplies.
The Ministry of Finance issued Notification No. 35/2026-Customs on October 30, extending the exemption originally introduced on June 1 and scheduled to expire on October 31.
The measure covers raw cotton under customs heading 5201, exempting imports from basic customs duty and the Agriculture Infrastructure and Development Cess.
Cotton Production Outlook Weakens
India’s 2026–27 cotton harvest faces pressure from irregular monsoon rainfall and high temperatures across major producing regions.
Industry estimates suggest production could decline to approximately 29 million bales of 170 kg, against expected domestic demand exceeding 34 million bales.
Domestic cotton prices have remained above ₹9,000 per 100 kg, compared with the government’s minimum support price of ₹8,717.
Prices normally weaken when the new harvest reaches markets in October, but concerns about reduced production have limited the seasonal decline.
Imports Rise as Mills Seek Cheaper Fibre
India’s cotton imports increased 63% year on year to $1.1 billion during April–September 2026.
The extended exemption could encourage additional shipments from the United States, Brazil and Australia.
For spinning mills, tariff-free imports provide an alternative procurement channel and could moderate domestic cotton prices.
However, higher freight costs, international cotton prices and currency movements may offset part of the tariff savings.
Regional Competition and Farmer Concerns
Lower cotton costs could improve India’s competitiveness in cotton yarn, fabrics and garments, increasing competitive pressure on textile exporters in Pakistan and Bangladesh.
Domestic growers, meanwhile, face the possibility of weaker farmgate prices during the harvest season as imported cotton increases available supplies.
The extension maintains duty relief but does not guarantee lower market prices.
The next indicators will be November–December cotton imports, new-season crop arrivals and domestic lint prices, which will determine how effectively the policy supports textile manufacturers without substantially weakening returns to farmers.
