India cotton imports could remain duty-free through December 2026, with the government expected to extend an exemption that is scheduled to expire on October 31, three government and industry sources said. No extension has been announced.

Key Takeaways

  • The current exemption from the 11% customs duty runs from June 1 through October 31, 2026.
  • Trade estimates put 2026–27 cotton output below 29 million bales, against demand of more than 34 million.
  • Higher US cotton futures, freight costs and a weaker rupee could limit imports even if the exemption is extended.

India cotton imports face an October deadline

India waived the 11% customs duty on cotton imports for five months to boost supplies during the lean season. Following inter-ministerial consultations, the government is expected to issue an order extending the exemption at least until the end of December, the sources familiar with the matter said.

The finance, commerce and textile ministries did not immediately respond to requests for comment. Until an order is issued, the existing exemption remains scheduled to end on October 31.

Mills seek relief as domestic supplies tighten

Domestic cotton prices usually ease when new-season arrivals begin in October, but prices have remained firm amid lower output prospects. Mills have sought a longer duty-free window, which could reduce their input costs and put pressure on domestic cotton prices.

Domestic prices were above 9,000 rupees per 100 kilograms, compared with the government-set floor price of 8,717 rupees for the new season. Patchy monsoon rains have reduced crop prospects.

Dipanshi Agarwal, principal analyst at S&P Global, said lower output, a stock-to-use ratio of about 31%—its lowest in five years—and strong textile demand supported the case for an extension. She cautioned that it could weigh on domestic prices.

Import costs could limit additional purchases

A dealer with a global trading house said benchmark US cotton futures above 83 cents per pound, elevated freight costs and a weaker rupee could limit large imports even if the duty-free window is extended.

India’s cotton imports rose 63% from a year earlier to $1.1 billion in the first six months of the fiscal year beginning in April 2026, trade ministry data showed. Chandrima Chatterjee, secretary-general of the Confederation of Indian Textile Industry, called for the import tax to be removed for an extended period to help manufacturers compete.

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