India is expected to extend its duty-free window for cotton imports by two months, to the end of December. Three government and industry sources said so, in a BusinessLine report on 26 October1. The finance, commerce and textile ministries did not immediately respond to emailed requests for comment1.
Inter-ministerial consultations are complete and an order extending the exemption at least until the end of December is expected soon, the sources said1. No order had been published when the report was filed1.
What is confirmed, and what is not
Confirmed: the government waived the 11% customs duty on cotton imports for five months, from 1 June through 31 October1.
Not confirmed: the length of any extension beyond December, and whether the order will carry a quantity cap, a tariff rate quota or conditions such as advance authorisation. The report gives no detail on any of these1. Until the notification appears, the extension is likely, not done.
Timing is part of the risk. The government extended its duty-free raw sugar window to 31 December from 31 October by DGFT notification3. Importers are estimated to have brought in only about 3 lakh tonnes of the 10 lakh tonnes allowed3.
Why the government is moving
Cotton prices usually soften once new-season arrivals start in October. This year they stayed firm because the crop outlook worsened1. Domestic cotton is trading above 9,000 rupees per 100 kg, above the government-set floor price of 8,717 rupees for the new season1.
Stocks are tight. The stock-to-use ratio is about 31%, the lowest in five years, according to Dipanshi Agarwal, principal analyst at S&P Global1. Trade estimates put the 2026-27 crop below 29 million bales, while demand exceeds 34 million bales1. Much of the crop still comes from older genetically modified seed, leaving it exposed to pest attacks and lower yields1.
Imports are already heavy. India bought $1.1 billion of cotton in the six months from April, up 63% from a year earlier, trade ministry data showed1.
What a lapse would cost at the border
The duty in question is the 11% customs duty on cotton imports1. If the exemption lapses, that rate applies to every bale cleared from 1 November. In India a bale is 170 kg, and ginned cotton also trades in candy of 356 kg4, so the rupee cost moves with the landed price of each lot.
Three things limit how much relief the window can deliver. US cotton futures are above 83 cents a pound, freight costs are high and the rupee is weak, a dealer with a global trading house said1. That mix could keep imports modest even with zero duty1. The rupee was 94.94 to the US dollar on 23 October5. An extension would mainly help volumes from the US, Brazil and Australia1.
What mills can and cannot pass on
Textile exports, including handicrafts, grew 10.3% year on year in April to August 2026, after falling 2.7% to $35.8 billion in FY20262. The US took 31% of shipments in FY2026 and the European Union about 16%2. Shipments to the US fell about 7%, while those to major European markets rose 9%2.
Costs are rising at the same time. Cotton yarn prices climbed roughly 60% to 400 rupees per kg in September 2026, from 250 rupees per kg in early 2026, according to a Rubix Data Sciences report2. A 10% additional US duty under Section 301 measures, introduced in July 2026, adds to the pressure in the largest market2.
Industry wants a longer window. Chandrima Chatterjee, secretary-general of the Confederation of Indian Textile Industry, said the duty should be scrapped for a long stretch. She argued it has only added to manufacturers' production costs and made it harder to compete with Vietnam and Bangladesh1. Analysts said extra imports could support global prices while easing domestic ones1.
What to watch this week
First, the notification: its exact wording on the end date, and whether eligibility is fixed by the bill of entry date or by vessel arrival. That decides whether cargo already at berth, or still at sea, gets the exemption.
Second, new-season arrivals, and whether domestic prices stay above the 8,717 rupee floor1. If they do, the case for keeping the duty off gets stronger.