The government announced on Saturday that the existing 11% import duty on cotton will remain suspended until October 30, 2026, as reported by Reuters. This policy change is expected to support the textile industry by improving access to high-quality cotton for exporters amid strong global demand for yarn. The move comes as India grapples with higher input costs and supply-chain disruptions linked to the Iran conflict. The exemption comes into effect from June 1, 2026, and is implemented during the cotton off-season to improve raw material availability while maintaining market stability and protecting farmers' interests. According to the Ministry of Textiles, the duty waiver will help improve raw material availability during the cotton off-season, reduce input costs for textile and apparel manufacturers, and strengthen the global competitiveness of Indian textile exports. The textile ministry stated that the measure will ensure adequate availability of cotton for the textile industry, support MSMEs, moderate input costs, and strengthen the competitiveness of Indian textiles.
According to Reuters, export-oriented mills requiring contamination-free cotton could import around 600,000 bales during the duty-free window. Industry officials noted that domestic cotton prices remain among the most competitive globally, with adequate supplies from the current crop limiting the need for imports. Vinay Kotak, president of the Cotton Association of India, told Reuters that at current price levels, imports are not economically attractive. The Apparel Export Promotion Council (AEPC) welcomed the decision, terming it a "much-needed relief" for the apparel sector, stating that the measure is expected to augment availability of cotton for the Indian textile and apparel sector. The Confederation of Indian Textile Industry (CITI) Chairman Ashwin Chandran noted that the removal of import duty is expected to provide relief across the textile and apparel value chain, helping spinning mills, fabric manufacturers and garment exporters improve margins and price their products more competitively in international markets. Industry stakeholders have welcomed the decision, noting that easier access to imported cotton could support production and exports amid rising global cost pressures.
As reported by Reuters, imports, if any, are likely to come from countries such as Australia, Brazil, the United States and several African nations that currently have surplus supplies. India had similarly allowed duty-free cotton imports from mid-August to the end of December last year, helping imports rise to a record 4.7 million bales in the current marketing year that began on October 1. The government said the duty exemption would help domestic manufacturers, particularly small and medium enterprises, by ensuring better cotton availability. India is one of the world's largest cotton producers, but certain segments of the textile industry, especially export-oriented mills, require contamination-free cotton that is often sourced from these countries. While cheaper imports may raise concerns among farmers, the government has stated that the measure is temporary and has been designed to ensure market stability while safeguarding farmers' interests.
The customs duty exemption on cotton imports is expected to benefit textile and apparel manufacturers that rely on imported cotton, as it lowers raw material costs and improves margins, especially at a time when domestic cotton prices remain elevated. According to market analysts, stocks likely to benefit from the Centre's move include Vardhman Textiles, Trident, Welspun Living, KPR Mill, Arvind, Page Industries, Gokaldas Exports, and Pearl Global Industries. The duty waiver should help textile and garment makers reduce input costs, improve profitability, and enhance export competitiveness, while domestic cotton producers and ginners may face pressure from cheaper imported cotton. The measure is anticipated to have a positive impact on the performance of the domestic textile industry, especially small and medium enterprises, ensuring better availability of cotton in the market. As per the AEPC, the decision will particularly benefit small and medium enterprises, which have been facing challenges due to the sharp increase in cotton and yarn prices.
The government believes the temporary duty waiver will help increase cotton availability, reduce production costs and strengthen the competitiveness of Indian textile exports in global markets. India's textile exports are dominated by cotton, and the country is aiming for USD 100 billion in textiles and apparel exports by 2030. CITI Chairman Ashwin Chandran highlighted that the removal of import duty is expected to help India's textile and apparel exporters better leverage opportunities emerging from Free Trade Agreements (FTAs), stating that the 11% import duty on cotton was acting as a major hindrance to the Indian textile and apparel sector in raising its global competitiveness since major Asian competitors already have duty-free access to cotton. The government noted that amid ongoing global volatility and uncertainty, the 11% import duty was creating barriers for Indian exporters to compete effectively in international markets. The exemption, which suspends the existing customs duties on cotton imports for five months, is also expected to help stabilize the domestic market while ensuring uninterrupted supply for textile manufacturers.
