Industry Odisha Bureau, Oct 31: The Centre has decided to extend the cotton import duty exemption until December 31.
Textile makers will keep importing cotton without customs duty until December 31, 2026. The Centre extended the exemption by two months from the earlier October 31 deadline. The move aims to boost cotton availability for India’s textile and apparel industry. The government expects lower input costs to ease pressure on manufacturers.
The Finance Ministry implemented the change by amending its May 30, 2026 customs notification. The new deadline simply replaces October 31 with December 31. It was issued under Section 25(1) of the Customs Act, 1962. That provision was read with Section 124 of the Finance Act, 2021. The relief remains temporary, not a permanent tariff change.
Cotton is the backbone raw material for spinning mills and many fabric makers. Steady supply helps mills plan purchases, schedule production and keep machines running. Imports give buyers extra options on price, quality, fibre length and timing. Reliable access matters most when domestic supply falls short on quality or timing. Not every manufacturer, however, relies on imported cotton.
Removing customs duty lowers the landed cost of eligible cotton shipments, all else equal. Yet the final benefit depends on global cotton prices, freight and exchange rates. A rising dollar or costlier shipping could erode the saving. Cotton is also just one cost alongside labour, power, machinery and logistics. So a duty cut will not lower total production costs by the same margin.
The government expects small and medium enterprises to benefit in particular. Smaller firms often have limited working capital and less room to absorb price swings. Better cotton availability could steady their raw material costs. Still, many SMEs buy yarn or fabric rather than importing cotton themselves. Their gains will depend on whether spinners pass on savings down the chain.
The Centre said the decision also considers the interests of domestic farmers. This reflects a familiar policy balance. Manufacturers want affordable cotton, while growers need fair prices for their crop. Large imports could weigh on local prices under certain market conditions. However, the actual effect depends on import volumes, domestic output and prevailing rates. The extension alone does not prove farm incomes will suffer.
Officials also expect relief to reach consumers eventually. That would require savings to pass through spinning, weaving, garment making and retail. Inventories, competition and other costs could slow or dilute such gains. Lower clothing prices are therefore a possibility, not a certainty.
Competitiveness also rests on more than raw cotton. Energy costs, productivity, logistics and global demand shape how Indian textiles fare. Exporters, in particular, compete on price, quality and delivery reliability. Duty-free imports can help, but they cannot fix every cost pressure.
The exemption now runs until year-end unless changed again. Its real value will depend on whether wider sourcing delivers affordable cotton without hurting farmers.
