The government on Saturday (May 30, 2026) exempted all customs duties on cotton imports for five months till October 30, 2026.

In a notification, the Finance Ministry said the import duty exemption will be effective from June 1, 2026.

The duty exemption will help increase the availability of cotton for the Indian textile sector.

The temporary duty exemption is expected to reduce input costs across the textile and apparel sector, thereby providing a targeted relief to manufacturers and consumers, while also keeping the interests of domestic farmers in mind.

Overall, the measure is anticipated to have a positive impact on the performance of the domestic textile industry, especially the small and medium enterprises, ensuring better availability of cotton in the market, the ministry said.

The government is in an “advanced stage of consultation” regarding the 11% customs duty on imports of raw cotton, and examining if the levy can be removed, with a decision expected soon, a senior official said.

Ministries, including finance, textiles, and agriculture, are deliberating on the duty, with the textile industry seeking its removal to mitigate cost pressures on domestic companies due to high prices.

“We are talking to Finance and Agriculture [Ministries], both, and it is in an advanced stage of consultation. We hope that the consultation will be finalised in the near future,” the official told PTI.

A delegation comprising apparel industry representatives and exporters met Vice President C.P. Radhakrishnan and several Union Ministers recently and sought the removal of the duty.

The delegation argued that the textile industry’s cotton requirement for the current year is projected at around 337 lakh bales, whereas cotton arrivals for the 2025-26 season are estimated at 292.15 lakh bales, resulting in a supply-demand gap of nearly 45 lakh bales.

It said this shortage is putting pressure on spinning mills and downstream textile manufacturers due to the limited availability of high-quality raw materials and rising input costs.

The Ministry of Finance has removed the 11% import duty on cotton till September 30.

In a notification issued on August 18, the Ministry said the Customs Duty will not be levied from August 19 to September 30 (including September 30) on cotton imports.

According to Nishant Asher, secretary of the Indian Cotton Federation, India imported 39 lakh bales of cotton in the 2024-2025 cotton season (October to September). Nearly two lakh bales of cotton are expected to be in transit now and these will benefit from the removal of the import duty. The Government should extend the import duty exemption for cotton booked till September 30, he said.

The Global Trade Research Initiative said cotton imports surged 107.4%, rising from $579.2 million in FY 24 to $1.20 billion in FY 25. Major suppliers last year included Australia ($ 258.2 million), the US ($ 234.1 million), Brazil ($ 180.8 million), and Egypt ($ 116.3 million).

Since February 2021, imports were subject to 11% duty (5% Basic Customs Duty and 5% Agriculture Infrastructure & Development Cess). The waiver is expected to help mills face high input costs and support yarn and fabric exporters struggling with competitiveness. The measure is a time-bound stopgap to stabilise markets before the new crop arrives.

The Cotton Textiles Export Promotion Council chairman Vijay Agarwal said the Government should consider institutionalising a regular policy framework to permit duty-free imports of cotton during July to October every year, coinciding with the southern hemisphere crop arrivals. This will enable textile mills to plan procurement well in advance and maintain India’s competitiveness in the global market.