India is expected to extend its duty-free cotton import window by another two months through December 2026, potentially lowering raw material costs for textile mills, easing domestic cotton prices and increasing imports from the United States, Brazil and Australia, according to three government and industry sources.
The government had waived the 11% customs duty on cotton imports for five months, from June 1 to October 31, to improve domestic supplies during the lean season. However, cotton prices have remained firm despite the arrival of the new crop season, amid concerns over lower domestic production.
Following inter-ministerial consultations, the government is expected to issue an order shortly extending the duty exemption at least until the end of December, the sources said. The finance, commerce and textiles ministries did not immediately respond to requests for comment.
India, the world’s second-largest cotton producer after China, is facing a potential supply shortfall in the 2026–27 season. Trade estimates indicate that cotton production could fall below 29 million bales, against demand exceeding 34 million bales.
Domestic cotton prices have risen above ₹9,000 per 100 kg, exceeding the government’s minimum support price of ₹8,717 for the new season. Patchy monsoon rainfall has affected crop prospects, while limited stocks and sustained textile demand have added to price pressures.
Dipanshi Agarwal, principal analyst at S&P Global, said lower domestic output and a stock-to-use ratio of around 31%—the lowest in five years—strengthened the case for extending the duty exemption. However, increased imports could put downward pressure on domestic cotton prices.
India’s cotton imports have already recorded significant growth. Trade ministry data showed that imports rose 63% year-on-year to $1.1 billion during the first six months of the current financial year, from April to September.
Despite the potential extension, higher international cotton prices, elevated freight costs and a weaker rupee could limit the scale of additional imports. US cotton futures were trading above 83 cents per pound, increasing the cost of overseas procurement.
Chandrima Chatterjee, secretary-general of the Confederation of Indian Textile Industry, called for the removal of the import duty for an extended period, arguing that the tax had increased manufacturers’ production costs and weakened the industry’s competitiveness against textile-exporting countries such as Vietnam and Bangladesh.
An extension of the duty-free import window could provide short-term relief to Indian textile manufacturers by improving access to raw cotton supplies. However, it may also intensify pricing pressure on domestic cotton farmers, as imported cotton becomes more competitive in the Indian market.