With daily cotton arrivals remaining dull at fewer than 70,000 bales a day during the first month of the current cotton marketing season (October 2026 to September 2027) and the Government of India deciding to extend the customs duty exemption on cotton till the end of December, the textile industry hopes there will be adequate cotton to meet the rising demand.

The Confederation of Indian Textile Industry (CITI) chairman Ashwin Chandran said in a press release that the duty exemption would strengthen the international competitiveness of the Indian textile and apparel sector that is targeting $100 billion in exports by 2030.

Cotton imports do not displace domestic cotton. In May 2026, a joint study by Gherzi and the International Cotton Advisory Committee (ICAC) said Indian industry needs a cotton policy environment that will enable it to compete effectively with its Asian peers, which have duty-free access to international cotton.

Imports are necessary to bridge the demand-supply gap arising from reduced cotton production in India, he said.

“The extension of the cotton import duty waiver till December 31, 2026, will ensure that Indian textile and apparel companies can keep their input costs under control. The move will provide near-term predictability for the value chain, enabling companies to plan production cycles and honour export contracts better,” he said in a statement.

According to Durai Palaniswamy, chairman of the Southern India Mills Association, the industry is likely to have imported around 72 lakh bales during the 2025-2026 season taking advantage of temporary duty exemptions (from June 1 to October 31) and mitigating the domestic cotton shortage.

There was no import duty on cotton during 2008-2021 that ensured win-win strategy for both the cotton farmers and the industry. The Government levied import duty when the country was net exporter (30-70 lakh bales) of cotton and it gave temporary exemptions from 2022.

Mr. Palaniswamy said Indian cotton productivity is 430-440 kgs a hectare as against the world average of 815kgs/ha and over 1,500 kgs/ha productivity level being achieved by more than 20 countries.

Considering the urgent policy intervention for raw material security, he sought import duty exemption for all varieties of cotton till 2030.

Cotton prices have surged ₹4,000 a candy in the past 10 days, barely 22 days into the 2026-27 cotton marketing season, raising concerns among more than 1,500 textile mills in Tamil Nadu over rising input costs.

“Cotton arrivals are not as expected for a couple of reasons,” said Nishant Asher, secretary of the Indian Cotton Federation.

Cotton prices have risen from ₹64,000 to ₹68,000 a candy on an ex-gin basis, an unusual increase for October. The anticipated decline in production, farmers holding back stocks in expectation of higher prices, and the scheduled reimposition of import duty from November 1 are contributing to the price rise, Mr. Asher said.

According to Durai Palaniswamy, chairman of the Southern India Mills’ Association, domestic cotton consumption in the 2025-26 season, which ended on September 30, 2026, stood at 336 lakh bales. Despite imports of 67 lakh bales, closing stocks were just 40 lakh bales.7

“Cotton farmers will not lose this year as the production is expected to be just 260 lakh bales as against a demand of 360 lakh bales. This is going to keep prices strong. However, if the import duty is reimposed, the textile industry will lose its competitiveness,” he said, calling for a balanced approach that will benefit the industry and the farmers.

The Cotton Textile Export Promotion Council (Texprocil) will focus on increasing the quantity of cotton that can be branded as ‘Kasturi Cotton Bharat’ over the next two years, said Ravi Sam, the newly elected chairman of Texprocil.

Less than 50% of the cotton that is brought for branding meets the mandatory specifications and tests to be branded as Kasturi Cotton. This has to improve. Retail brands in other countries should also recognise the quality of Kasturi Cotton and encourage its use as it comes with traceability, he added.

Further, Kasturi branding starts from ginning units. There should be measures to ensure that farmers benefit from Kasturi cotton as they play a major role in reducing trash content and improving the fibre quality of cotton. They should get the premium that the ginners and other players in the textile value chain get from Kasturi cotton.

The government should ensure that availability of spurious cotton seeds in the market is controlled and the number of approved seeds is reduced to so that farmers know what to sow, Mr. Ravi Sam said.

On the Free Trade Agreements (FTAs), he said Indian garment exporters had limited access in the U.K. and European markets for almost two decades due to duties that were levied on Indian goods. With India signing FTAs, the industry should make use of the benefits. The Confederation of Indian Industry- Southern Region has begun conducting hand holding sessions for exporters on the FTAs. This will be another area of focus for the Texprocil, he added.

Nearly 2.1 lakh bales of Indian-grown cotton were certified as Kasturi Cotton Bharat in the cotton marketing season that ended on September 30, underscoring the growing importance of traceability in India’s textile value chain.

The adoption of Kasturi Cotton has accelerated sharply since its launch. Certified volumes rose from 47,100 bales in 2023-24 to 2.13 lakh bales in 2025-26, while more than 10 lakh bales have now been brought under the Kasturi Cotton Bharat blockchain, creating a technology-enabled trail from cotton to the final product.

The initiative is aimed at giving buyers greater confidence over the origin and quality of Indian cotton. Industry users say the blockchain-based certification is increasingly becoming relevant as international textile buyers, particularly in the U.S. and Europe, demand greater transparency and traceability across their supply chains.

The momentum is expected to strengthen further. Of an estimated 498 lakh bales of cotton production by 2031-32, around 132 lakh bales are projected to qualify as Kasturi Cotton. The initiative currently has 124 active registered users, including 33 textile mills.

For exporters, the proposition is already translating into commercial opportunities. B. Shanmugavadivel, Managing Director of SBT Apparels, said the company has so far procured 3,000 bales of long-staple Kasturi Cotton from the Cotton Corporation of India for manufacturing garments for export.

According to him, Kasturi Cotton offers better quality than regular cotton, while its traceability credentials are particularly valuable in overseas markets where buyers are increasingly seeking verifiable sourcing. Garments made from Kasturi Cotton, he said, are therefore receiving better acceptance.

Kulin Lalbhai, Vice Chairman of Arvind Limited, said traceability has become an important component of the global textile supply chain as buyers increasingly seek confidence in the products they source. The Kasturi Cotton initiative, launched in 2020, has helped make such traceability accessible across the industry.

The Bureau of Indian Standards (BIS) is strengthening cotton fibre testing infrastructure across the country under the Scheme for Supporting Other Laboratories for Creation/Augmentation of Test Facilities in Critical Areas.

A press release said it has allocated ₹38.72 crore to modernise 21 key laboratories operated by the Textiles Committee, Power Loom Service Centres, and the Cotton Corporation of India (CCI), located across key cotton-producing regions of India.

The scheme aims to provide 22 high volume instrument testers and 44 trash analysers in the 21 laboratories. Of these, it has commissioned 14 HVI testers and 28 trash analysers in 13 laboratories, including 11 laboratories of the Textiles Committee and two of the CCI.

The release said the objective is to ensure standardised quality parameters across the entire cotton-to-textile supply chain by bridging critical infrastructural gaps, empowering local producers, and positioning Indian cotton for sustained international leadership.

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With cotton and yarn prices continuing to fluctuate, textile mills and garment units in Tamil Nadu are seeking measures to improve cotton productivity and availability.

Spurt in demand for cotton yarn globally is among the main reasons for volatility in its prices, said Ashwin Chandran, chairman of the Confederation of Indian Textile Industry.

International demand for yarn is better than the last couple of years. Demand for cotton yarn was muted since 2023-24. Demand for textile products across the value chain started picking up last December. Most of the textile units maintained hand-to-mouth stocks for the last years because of the low demand.

Demand for yarn from China and Bangladesh saw an increase and domestic demand for garments is also seeing growth. This has led to better market for yarn. Further, hosiery yarn exports are mainly by the mills in Gujarat and not much from those in Tamil Nadu.

However, the cotton futures market went up to 92 cents for a pound and has corrected now to about 86 cents. Thus, the prices of cotton, the basic raw material, saw prices fluctuating. While the landed prices of clean cotton has seen ₹70 increase, yarn prices have increased by about ₹95 a kg in the last one year, he said.

The focus of the entire industry should be on improving cotton productivity in the country for raw material security, he added.

Meanwhile, the Tiruppur Exporters and Manufacturers Association has urged the Central and State governments to ban cotton exports. It said the State, especially the western districts, design and manufactures a wide range of textile products and supply to both, domestic and international markets.

This industry, predominantly driven by small and medium-sized enterprises, provides employment and livelihoods to thousands of people. However, since January this year, certain large spinning mills and traders “have been artificially restricting the supply of cotton, causing yarn prices to skyrocket and creating an unprecedented crisis for local manufacturing units—particularly the small and medium-sized ones,” alleged the Association.

Last year, cotton requirement was 350 lakh bales, whereas current domestic production stands at 290 lakh bales. With the existing cotton shortage, the government removed the import duty (11%) on cotton and 62 lakh bales of cotton were imported. Yet, cotton prices continue to rise.

This is due to artificial market manipulation, the Association claimed. The continuous rise in cotton prices have increased raw material costs, causing garment orders to be diverted to other States and countries, it said.

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Textile mills are witnessing a revival in cotton yarn demand, with capacity utilisation crossing 90%, but a sharp rise in cotton prices is raising concerns over the sustainability of operations.

“The demand for cotton yarn started reviving almost five months ago and currently, mills are not holding much yarn stocks,” said Durai Palanisamy, chairman of the Southern India Mills Association (SIMA).

Cotton prices have risen sharply since mid-March, with domestic prices increasingly moving in line with ICE Futures, he said, adding mills are also maintaining relatively low inventories, with most having less than two months of cotton stock.

Cotton prices, which remained in the range of ₹51,700 to ₹57,000 a candy between October last year and the end of March 2026, had climbed to ₹70,000 a candy on September 2 on an ex-gin basis.

“Various factors such as higher demand from China and lower production expected from the U.S. and China are pushing the prices up,” said Nishant Asher, secretary of Indian Cotton Federation.

The increase in raw material costs has also pushed up cotton yarn prices.

“Our cotton yarn cannot be consumed fully by the domestic apparel sector. Textile mills need to tap opportunities in the international market for viable operations. Yarn prices adjust to cotton prices. Internationally too, yarn availability is under pressure, pushing prices up,” said Ravi Sam, vice-chairman of the Cotton Textile Export Promotion Council.

Industry sources said Indian cotton prices remain lower than international prices. The Cotton Corporation of India (CCI), which holds a substantial quantity of cotton procured under the minimum support price (MSP) regime, should stabilise domestic cotton prices.

Production of cotton during the current marketing season that commenced on October 1, 2025 is estimated to be seven lakh bales less than the previous year.

The Committee on Cotton Production and Consumption that met in Mumbai on July 29 expected the production this season to be 290.24 lakh bales of 170 kg each while the production in 2024-2025 was 297.24 lakh bales. Consumption of cotton by large-scale and MSME textile mills, which are the main consumers of cotton in the country, is like to be 320 lakh bales while it was just about 306 lakh bales last season.

While cotton exports so far are six lakh bales less than the 2024-2025 season, imports are up by almost 15 lakh bales. “We expect the cotton season to end in September with nearly 60 lakh bales of import,” said chairman of the Southern India Mills’ Association Durai Palanisamy.

The next cotton season will start in October with nearly 42 lakh bales of stock, which is the lowest in the last three years. “Cotton yarn exports have crossed 100 million kg a month for the last six months. The domestic demand is also good. Hence, the demand for cotton will continue to grow,” said Mr. Palanisamy.

The Cotton Association of India is of the view that total cotton production, including imports, will be 337 lakh bales. There is an improvement in yield, it said.

However, the trade and industry have expressed concern over the decline in area under cotton for the next season. The progress of cotton production will depend on the monsoon rains, they said.