India Set to Extend Duty-Free Cotton Imports to December 31

By Marcus Bennett

India is expected to extend its duty-free cotton import window by two months, to December 31, as domestic production heads for a 12–18% decline in the 2026-27 season that began in October. No official order had been issued at the time of reporting; the extension is expected after inter-ministerial consultations.

The move would ease raw material costs for textile mills and stabilise domestic prices, according to industry sources. India, the world's second-largest cotton producer after China, waived the 11% customs duty on cotton imports for five months, from June 1 to October 31, to improve supplies during the lean season.

How big is the crop shortfall?

Traders and industry representatives estimate 2026-27 production at around 29 million bales, against 33 million bales estimated for 2025-26. One bale weighs 170 kg. Deficient rainfall and high temperatures across major cotton-growing states are expected to cut yields.

The state-level picture is starker:

• Maharashtra, India's largest grower: down 20%, at 8.5–9.2 million bales. In Marathwada, crop losses could reach 40–50%.
• Andhra Pradesh: down 35%, to 1.3–1.4 million bales.
• Karnataka: down 30–35%, to 1.9–2 million bales.
• Telangana: down 20%, to 3.5–3.7 million bales.
• Gujarat: down 12%, at 6.2–7 million bales, including cotton brought in from other states.
• Odisha: down 30%, to 0.2–0.25 million bales.
• North India: flat at 2.8–3 million bales.
• Madhya Pradesh: steady at 1.7–1.8 million bales.

What does this mean for mills and prices?

Domestic cotton prices have held above Rs 9,000 per 100 kg, exceeding the government's minimum support price of Rs 8,717 for the new season. Textile mills have sought an extension of duty-free imports to manage raw material costs. An extension would likely increase imports from the US, Brazil and Australia — a sourcing shift with direct implications for spinners' cost structures and procurement calendars.

The maths is straightforward. An 11% duty waiver on imported cotton, set against a domestic price floor breached by nearly Rs 300 per 100 kg, tilts mill sourcing toward overseas supply for as long as the window stays open.

Who bears the risk?

Not everyone backs the extension. Some traders have raised concerns that prolonged duty-free imports could pressure farmers, particularly in drought-affected regions. They have also pointed to cotton stocks held by the state-run Cotton Corporation of India (CCI) as an alternative source of supply that could meet mill demand without further import liberalisation.

That sets up a familiar policy tension: mill competitiveness against grower protection, with CCI buffer stock as the potential middle path. The government has yet to signal which way it will lean beyond the expected two-month extension.

For now, sourcing teams should treat December 31 as the working assumption rather than a confirmed date, since the order remains unsigned. A formal notification, the final crop numbers from Maharashtra and Marathwada in particular, and any CCI stock release will determine whether duty-free access persists into 2027 or mills return to paying the full 11% duty.