India Set to Extend Duty-Free Cotton Imports Through December to Cool Rising Local Prices — October 26, 2026
The Indian government is set to extend duty-free cotton imports for an additional two months through December, according to government and industry sources cited by Reuters. The planned policy intervention aims to rein in domestic cotton prices, relieve margin pressure on textile spinning mills, and ensure uninterrupted raw material availability ahead of peak manufacturing schedules.
An official notification from the Ministry of Finance is expected shortly following the conclusion of inter-ministerial consultations.
Background on the Duty Exemption
India, the world's second-largest cotton producer after China, previously eliminated the 11% customs duty on cotton imports for a five-month window spanning June 1 through October 31 to bridge supply deficits during the lean summer period.
Under normal seasonal patterns, domestic cotton prices begin to soften in October as fresh kharif crop arrivals reach agricultural wholesale markets. This year, however, domestic prices have remained stubbornly elevated due to tightening production forecasts. Domestic cotton has been trading above ₹9,000 per 100 kg, notably above the government-mandated minimum floor price of ₹8,717 per 100 kg set for the new season.
Tightening Domestic Supplies and Crop Shortfalls
The push to widen the duty-free window comes as industry participants revise their domestic harvest estimates downwards:
- Production Drop: India's cotton output in the 2026–27 marketing season is projected to drop 12% to 18% year-on-year to around 29 million bales (170 kg each), compared to approximately 33 million bales in the previous season.
- Demand-Supply Gap: Annual domestic demand is expected to exceed 34 million bales, depressing the country's stock-to-use ratio to a five-year low of approximately 31%.
- Regional Crop Losses: Key producing belts have suffered from deficient monsoon showers and high temperatures. Output in Maharashtra is anticipated to drop around 20%, with the Marathwada region facing estimated crop losses of 40% to 50%. Substantial harvest declines are also projected in Karnataka and Andhra Pradesh.
Implications for the Indian Textile Sector and Markets
For Indian textile manufacturers and spinning mills, the duty waiver extension offers critical cost relief. Fabric and yarn makers have been contending with rising raw fiber expenses alongside challenging export conditions. Permitting zero-duty imports enables mills to source shipments from key global suppliers, notably the United States, Brazil, and Australia, keeping domestic yarn pricing competitive in international markets.
However, the policy stance continues to draw resistance from domestic farming groups and agricultural trade bodies. Farmer representatives argue that extending the zero-tariff regime into November and December coincides directly with peak domestic crop arrivals, threatening to dampen spot farmgate realisations in drought-affected agrarian belts. Meanwhile, industry officials maintain that existing reserves held by state agencies, such as the Cotton Corporation of India (CCI), alongside supplementary overseas cargoes, remain vital to stabilise consumer-facing textile supply chains through the year-end.
