Centre Extends Customs Duty Exemption on Cotton Imports Until December 31

The Finance Ministry has extended the customs duty exemption on cotton imports by two months to December 31, 2026. The decision aims to support the textiles sector amid concerns over tighter domestic supply and lower production expectations.

NEW DELHI — The Centre has extended the customs duty exemption on cotton imports by two months, moving the deadline to December 31, 2026. The measure is designed to maintain the supply of the fiber crop for the domestic textiles sector.

According to a notification issued by the Finance Ministry on Friday, the customs duty exemption has been extended from its previous deadline of October 31. The 11 percent customs duty was initially removed effective June 1 through October 31.

The policy extension follows concerns regarding tighter domestic cotton supplies. Market expectations point to a likely decline in production for the 2026-27 season due to a reduction in acreage and prevailing drought conditions in key producing states like Maharashtra and Karnataka, which have impacted crop prospects.

Although the new crop has begun arriving in various markets, prices remain firm amid weak arrivals. This trend is driven by lower yields and instances of farmers withholding their produce in anticipation of higher prices.

Trade sources indicate that daily raw cotton arrivals currently range between 70,000 and 80,000 bales (170 kg each), falling short of initial trade expectations. Market participants anticipate that arrivals may increase following Diwali. Cumulative arrivals up to October 23 reached 15 lakh bales, while estimated consumption stood at 23 lakh bales, according to CotYarn estimates.

The continuation of the duty exemption is expected to allow textile mills to source cotton internationally at competitive prices, lower input costs, and enhance the global competitiveness of Indian textile and apparel exports. At the same time, the extended exemption is likely to exert downward pressure on domestic cotton prices, which had experienced a rebound in recent weeks.

"The extension of the customs duty exemption on cotton imports is a timely intervention for the domestic textiles sector, which is currently navigating supply constraints and firm pricing. By enabling mills to source raw material internationally at competitive rates, this policy helps protect profit margins and sustains export competitiveness amidst lower domestic crop yields and adverse weather conditions in key producing regions." — Dr. Shishir Gupta, Founder & CEO, StartupLanes