India Waives Cotton Import Duty Until October 30 to Boost Textile Sector

The Indian government has announced a significant policy change, exempting all customs duties on cotton imports for a period of five months, effective from June 1, 2026, until October 30, 2026. This crucial decision was officially notified by the Finance Ministry on Saturday, May 30, 2026, and is aimed at providing substantial relief to the country's textile industry. The exemption covers both the basic customs duty and the Agriculture Infrastructure and Development Cess (AIDC) on imported cotton, effectively bringing the customs duty rate on cotton imports to zero during this specified period. The move is a direct response to the persistent demands from the textile and apparel sector, which has been grappling with soaring cotton prices and concerns over raw material availability. The primary objective behind this temporary waiver is to augment the availability of cotton for the domestic textile industry, thereby moderating input costs for manufacturers across the entire textile and apparel value chain. Industry stakeholders, including spinning mills and garment exporters, have long advocated for such measures to ensure a steady and competitive supply of raw cotton, which is vital for maintaining India's global competitiveness in textile exports. The textile and apparel sector is a cornerstone of the Indian economy, being one of the largest employers and a significant contributor to the nation's exports, typically accounting for 8-10% of total merchandise exports. The government's decision is expected to have a positive impact on the performance of the domestic textile industry, particularly benefiting small and medium enterprises (SMEs) by ensuring better access to raw materials and reducing production cost pressures. This is not the first instance of the government intervening to manage cotton prices and supply. Some reports indicate a previous exemption from August to December 2025, with duties being reinstated on January 1, 2026. The current waiver, implemented during the cotton off-season, is strategically timed to provide timely relief. Textile industry bodies, such as the Confederation of Indian Textile Industry (CITI), have lauded the government's decision. CITI chairman Ashwin Chandran stated that the temporary removal of the 11% import duty on cotton would significantly help the Indian textile and apparel sector in becoming more competitive in the international market. He highlighted that major Asian competitors already have duty-free access to cotton, and the previous import duty was a major hindrance to India's global standing. The exemption is also calibrated to balance the needs of the industry with the interests of domestic cotton farmers. The Ministry of Textiles emphasized that the government has adopted a proactive and balanced approach, ensuring adequate availability for the industry while safeguarding farmers' interests and promoting market stability. The move is expected to support MSMEs, moderate input costs, and strengthen the competitiveness of Indian textiles. Economically, the measure is anticipated to lower the cost of imported cotton, thereby supporting the entire value chain from yarn to fabric and garments. This will allow Indian manufacturers to offer more competitive prices in the global market, especially amidst global headwinds and pricing pressures. The relief is also crucial given the reported surge in India's raw cotton imports in the fiscal year 2026, which increased by 54.6% year-on-year to $1.86 billion, while exports fell by 33.9% to $436.35 million. In essence, the government's decision to temporarily waive customs duties on cotton imports is a well-received and strategic step to invigorate the Indian textile industry, address supply-side challenges, and ensure its continued growth and competitiveness on the international stage.

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