The Ministry of Finance's Department of Revenue issued Notification No. 35/2026-Customs on October 30, 2026, extending the existing full exemption from Basic Customs Duty and Agriculture Infrastructure and Development Cess on cotton imports under Customs Tariff Heading 5201 . The exemption, originally granted for the period from June 1 to October 31, 2026, has now been extended by two months through December 31, 2026 . The measure was introduced to ensure adequate cotton availability during the off-season, moderate raw material costs, and support textile manufacturers and MSMEs .
The extension comes amid tightening domestic cotton supply conditions. India's cotton production for the 2026-27 season is estimated below 29 million bales, while demand is expected to exceed 34 million bales, according to trade estimates . Daily cotton arrivals during the first month of the new marketing season remained dull at fewer than 70,000 bales a day, prompting industry bodies to push for a longer duty-free import window . Domestic cotton prices have remained firm, trading above ₹9,000 per 100 kg, higher than the government's minimum support price of ₹8,717 per 100 kg for the new season .
CITI Chairman Ashwin Chandran stated that the measure was "the urgent need of the hour," noting that the Indian textile and apparel sector continues to confront persistent global headwinds and rising competition, with the challenge exacerbated by domestic cotton supply being unable to keep pace with industry requirements . He emphasized that the extension will ensure Indian companies can keep input costs under control and not be rendered globally uncompetitive, while providing near-term predictability for the value chain to plan production cycles and honour export contracts better .
The duty waiver has already driven a surge in imports. India's cotton imports rose 63% year-on-year to $1.1 billion during the first six months of FY27, according to trade ministry data . The Cotton Association of India finalized the 2025-26 season import figure at 71.60 lakh bales, significantly higher than earlier estimates of 62 lakh bales, against exports of just 15 lakh bales . This shift underscores India's transition from a cotton exporter to a major net importer in the global market.
The government has sought to balance the interests of the textile industry with those of domestic cotton farmers. The Ministry of Textiles stated that the decision aims to augment cotton availability, ensure competitive prices, support domestic manufacturing, address specialised cotton requirements, and support value addition across the textile and apparel value chain . The Finance Ministry noted that the extension is expected to help reduce input costs across the sector while keeping farmers' interests in mind .
For logistics and EXIM stakeholders, the extension provides a two-month window of certainty for import planning and shipment scheduling. Cotton imports from key suppliers such as the US, Brazil, and Australia are expected to continue flowing in, though analysts caution that elevated global cotton futures, higher freight costs, and a weaker rupee could temper buying interest despite the duty relief . The move supports the broader objective of strengthening India's textile export competitiveness as the sector pursues its $100 billion export target by 2030.