India is likely to extend its duty-free cotton import exemption by another two months, until the end of December 2026, as lower domestic production prospects and firm cotton prices put pressure on textile manufacturers. The move could help mills reduce raw material costs and increase imports from countries such as the United States, Brazil and Australia, according to government and industry sources cited by Reuters.

The government had waived the 11% customs duty on cotton imports for five months, from June 1 to October 31, 2026, to improve supply during the lean season. However, domestic prices have remained firm despite the arrival of the new cotton season, prompting textile mills to seek an extension.

Domestic cotton prices have risen above ₹9,000 per 100 kg, exceeding the government-set minimum support price of ₹8,717 for the new season. Lower crop prospects following uneven monsoon rainfall and tightening cotton stocks have added to supply concerns.

Trade estimates suggest that India’s cotton production could fall below 29 million bales in the 2026–27 season, compared with demand exceeding 34 million bales. The country’s stock-to-use ratio has also declined to around 31%, its lowest level in five years, according to S&P Global analyst Dipanshi Agarwal.

Extending the duty exemption could improve cotton availability and ease domestic prices, benefiting spinning mills and other textile manufacturers. However, higher international cotton futures, elevated freight costs and a weaker rupee could limit the scale of additional imports.

India’s cotton imports increased 63% year-on-year to $1.1 billion during the first six months of the current fiscal year, according to trade ministry data.

The Confederation of Indian Textile Industry has also called for a longer-term removal of the import duty, arguing that lower raw material costs would help Indian textile manufacturers remain competitive with exporters in Vietnam and Bangladesh.