With the change in rules, India has 'dispensed with' the registration requirement for exports of cotton and cotton yarn, the government said on Monday in two separate notifications.
Prior to Monday's notifications, traders were required to register in advance their targeted export volume for the year.
India is likely to harvest a record 40 million bales this crop year that began on Oct. 1 and is set to surpass China as the world's top producer. But a sharp drop in prices is prompting farmers to hold back supply.
Indian consumption is not enough to absorb the rising output, and China, the biggest buyer of Indian cotton, has been scaling down its overseas purchases.
The state-run Cotton Advisory Board estimates India's exports could drop 24 percent to 9 million bales in the current year.
But traders expect a much steeper fall due to the weak Chinese demand.