Govt likely to extend duty-free cotton imports through Dec to curb prices

Domestic prices usually ease when new-season arrivals begin in October, but have remained firm this year amid lower output prospects, prompting mills to seek a longer duty-free import window. After the completion of inter-ministerial consultations, the government is expected to issue an order soon extending the duty exemption at least until December end, said the sources familiar with the matter. The finance, commerce and textile ministries did not immediately respond to emailed requests for comment.

Analysts said additional imports could support global cotton prices ‌and help curb domestic rates, which have risen after patchy monsoon rains cut crop prospects. Domestic cotton prices are above ₹9,000 ($94.80) per 100 kg, higher than the government-set floor price of ₹8,717 for the new season. Lower domestic output, a tight stock-to-use ratio of about 31% - its lowest level in five years - and strong textile demand supported the case for extending the duty exemption, said Dipanshi Agarwal, principal analyst at S&P Global.

However, it could weigh on domestic prices, she said. India's ​cotton output is likely to fall below 29 million bales in 2026-27, against demand of more than 34 ‌million bales, according to trade estimates. In the absence of newer upgrades, farmers use outdated genetically modified cotton seeds, leaving the crop vulnerable to pest attacks and lower yields. Higher benchmark US ​cotton futures, ‌trading above 83 cents per pound, elevated freight costs and a weaker rupee could limit large imports ‌even if the duty-free window is extended, said a dealer with a global trading house.

India's cotton imports rose 63% year-on-year to $1.1 billion during the first six months of the current fiscal ‌year ​from April, trade ministry ​data showed. India should remove the import tax for an extended period, which has only raised manufacturers' production costs, to help the textile industry compete with Vietnam and Bangladesh, ‌said Chandrima Chatterjee, secretary-general ​of the Confederation of Indian Textile Industry.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.) Don't miss the most important news and views of the day. Get them on our Telegram channel First Published: Oct 26 2026 | 3:47 PM IST