Government Extends Cotton Import Duty Exemption Until 31 December 2026 To Improve Supplies And Ease Textile Industry Costs

The government has extended the customs duty exemption on cotton imports until 31 December 2026. The two-month extension is intended to improve raw material supplies and ease costs for India’s textile and apparel industry.

Cotton Import Duty Exemption Extended

The exemption was announced in May and was due to end on 31 October 2026. The government has now extended it by two months, allowing cotton imports to remain exempt from customs duty until 31 December 2026.

The decision is expected to improve cotton availability in the domestic market. It is also intended to help textile manufacturers, particularly small and medium enterprises (SMEs), manage their raw material costs.

Cotton Supply Shortage And Firm Prices Drive Extension

Domestic cotton prices have remained firm despite the arrival of the new-season crop in October. Reuters reported that prices were above ₹9,000 per 100 kg, compared with the government’s minimum support price of ₹8,717 for the new season.

India’s cotton output is expected to fall below 29 million bales in 2026–27, while demand is estimated to exceed 34 million bales. This points to a potential shortfall of more than five million bales. The stock-to-use ratio was also estimated at around 31%, its lowest level in five years.

Textile Manufacturers Expected To Benefit

The Finance Ministry said the extension is expected to reduce input costs across the textile and apparel sector. The measure is intended to provide relief to manufacturers and consumers, while keeping the interests of domestic cotton farmers in mind.

The government also expects the exemption to support the domestic textile industry by improving access to cotton. Greater availability of raw materials could help manufacturers maintain production and meet their requirements.

Also Read - AI Financing Risks Beyond The Bubble: Hidden Debt And Complex Deals Could Threaten Financial Stability