NEW DELHI/MUMBAI: India is expected to extend duty-free cotton imports for another two months through December, three government and industry sources said, in a move that could cut costs for textile mills, curb domestic prices and boost imports from the US, Brazil and Australia.
India, the world’s biggest cotton producer after China, waived the 11 percent customs duty on cotton imports for five months from June 1 through October 31 to boost supplies during the lean season. 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 rupees (USD94.80) per 100 kg, higher than the government-set floor price of 8,717 rupees for the new season.
Lower domestic output, a tight stock-to-use ratio of about 31 percent — 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.
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