Centre Suspends Cotton Import Duty Until October 31 to Boost Textile Sector and Exports

The Finance Ministry has announced a temporary exemption of customs duties on cotton imports for five months, starting June 1, 2026, in a bid to address the persistent demand-supply imbalance in the Indian textile sector. Currently, the customs duty stands at 11 percent, but this decision is aimed at boosting the availability of cotton essential for various segments of the textile industry. The government also recently increased the Minimum Support Price (MSP) for cotton for the upcoming 2026-27 marketing season, indicating a commitment to protect farmers while facilitating the requirements of manufacturers.

This exemption is expected to lower input costs across the textile and apparel sector, thereby providing financial relief to both manufacturers and consumers. The industry, which employs over 45 million people in India, stands to benefit from increased access to high-quality cotton, ensuring the stability of the textile value chain. Importantly, most of the cotton imports are aimed at specialized industrial needs rather than competing with domestic supply, which could further mitigate any adverse effects on local farmers. With reduced production costs, it is anticipated that the sector may become more competitive in global markets, potentially reviving orders for small and medium enterprises.

Looking ahead, the government appears focused on striking a balance between ensuring a stable cotton supply for manufacturers and maintaining the welfare of domestic farmers. The increase in MSP to ₹8,267 per quintal for medium-staple cotton and ₹8,667 per quintal for long-staple cotton is a strategic move aimed at safeguarding farmers’ interests as the market adjusts to the new import dynamics. The decision to monitor cotton prices and retain the capacity to impose safeguard measures as necessary reflects an adaptive policy approach, aiming to bolster the Indian textile sector and contribute to the broader objectives of the ‘Make in India’ initiative.