India may prolong duty-free cotton imports until year-end to ease mill costs
The Indian government is expected to extend the waiver of the 11% customs duty on cotton imports through December, aiming to lower textile-mill expenses and temper domestic cotton prices.
India’s ministries of finance, commerce and textiles are poised to issue an order extending the 11% customs-duty waiver on cotton imports until the end of December, according to three insiders. The original five-month exemption, running from June 1 to October 31, was intended to augment supplies during the lean season, but domestic cotton prices have stayed firm despite new-season arrivals. Extending the duty-free window could lower input costs for textile mills, stimulate imports from the United States, Brazil and Australia, and help bring prices closer to the floor level of ₹8,717 per 100 kg.
Analysts point to a stock-to-use ratio of about 31%, the lowest in five years, and an expected shortfall in cotton output below 29 million bales against demand of over 34 million bales. While higher U.S. cotton futures, freight costs and a weaker rupee may limit the volume of imports, industry leaders argue that removing the tax longer would improve the sector’s competitiveness against rivals such as Vietnam and Bangladesh.
Why it matters
Extending duty-free cotton imports could lower textile costs and stabilize prices for a key Indian industry.
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