New Delhi: The union government has extended the existing customs duty exemption on cotton imports until 31 December 2026, the textile ministry said on Saturday. The decision has been taken keeping in view raw material requirements of domestic textile industry.
The extension has been notified by the Department of Revenue, Ministry of Finance, dated October 30. Through this amendment, the existing exemption, which was available until October 2026, has been extended by two months, up to 31 December 2026.
In May, the government had exempted cotton imports from customs duties for five months, till 31 October 2026.
Extension to provide relief to manufacturers, consumers
"The extension is expected to help reduce input costs across the textile and apparel sector, thereby providing targeted relief to manufacturers and consumers, while also keeping the interests of domestic farmers in mind," the finance ministry said.
The textile ministry said, "The Government of India remains conscious of the need to balance the requirements of the textile industry with the interests of domestic cotton farmers, while promoting the sustainable and long-term growth of the entire cotton and textile value chain."
The decision aims to augment the availability of cotton for the domestic textile sector, ensure the availability of cotton at competitive prices, support domestic manufacturing, address specialised cotton requirements and support value addition across the textile and apparel value chain, it added.
The measure is expected to provide greater flexibility to textile and apparel manufacturers in meeting their raw material requirements, help ease input cost pressures, support Micro, Small and Medium Enterprises (MSMEs), and strengthen the competitiveness of Indian textiles in domestic and international markets.
Concerns over domestic cotton availability
The extension comes amid concerns over domestic cotton availability and firm prices.
According to a Reuters report last week, domestic cotton prices had remained above Rs 9,000 per 100 kg, higher than the government's Minimum Support Price (MSP) of Rs 8,717 for the new season.
The report cited trade estimates that India's cotton output could fall below 29 million bales in 2026-27, against demand of more than 34 million bales. It also noted that the stock-to-use ratio, an indicator of available supplies relative to demand, was around 31 per cent, its lowest level in five years.
The move also comes amid higher US tariffs on Indian goods. The United States implemented additional tariffs of 10 per cent and 12.5 per cent on imports from several trading partners, including India, from 21 July 2026.
CITI welcomes decision
The Confederation of Indian Textile Industry (CITI) welcomed the decision and said it would strengthen the international competitiveness of the Indian textile and apparel sector, targeting $100 billion in exports by 2030.
"This measure was the urgent need of the hour, with the Indian textile and apparel sector continuing to confront persistent global headwinds and rising competition, with the challenge exacerbated by the domestic supply of cotton being unable to keep pace with the industry's requirements," CITI Chairman Ashwin Chandran said.
The extension of the cotton import duty waiverwill ensure that Indian textile and apparel companies can keep their input costs under control and not be rendered globally uncompetitive. The move will provide near-term predictability for the value chain, enabling companies to plan production cycles and honour export contracts better, he added.
(With inputs from PTI & ANI)
