India’s cotton imports are set to hit a record 60 lakh bales for the 2025-26 season, driven by textile mills rushing to utilize an 11% duty exemption. The Cotton Association of India has raised its import forecast, signaling strong domestic demand but a shift away from exports.
The Indian cotton market is witnessing a significant shift as import volumes are projected to reach an unprecedented 60 lakh bales for the 2025-26 season. This sharp increase, confirmed by the Cotton Association of India (CAI), marks a substantial rise from earlier expectations and reflects a 19 lakh bale jump over the previous year's total. The primary driver for this surge is the 11% import duty exemption, which has incentivized domestic textile mills to prioritize foreign cotton over local supplies to manage costs.
Textile Mills Increase Reliance on Imports
Textile mills across the country have been aggressively securing shipments to capitalize on the duty-free window. Exchange data and trade reports indicate that approximately 51 lakh bales had already reached Indian ports by the end of June 2026. Industry participants expect an additional 10 to 15 lakh bales to arrive before the end of September. This strategy allows mills to secure raw material at competitive prices while the tax advantage remains active. The CAI has noted that mills are eager to maximize this benefit before any potential policy changes, leading to this record-breaking import volume.
Impact on Supply and Consumption Dynamics
While imports have soared, the export outlook has softened. The CAI has revised its export projections downward to 15 lakh bales, a decrease from the earlier estimate of 18 lakh bales. This adjustment suggests that more domestic production and imported stock are being channeled into local manufacturing rather than overseas markets. Simultaneously, the Confederation of Indian Textile Industry (CITI) has reported an upward revision in total cotton consumption to 348 lakh bales for the current season.
Risks and Market Monitorables
The total supply for the 2025-26 season is now estimated at 452.59 lakh bales, factoring in opening stocks, domestic pressing, and imports. For investors tracking textile companies, the reliance on imported cotton presents both opportunities and risks. While lower raw material costs due to the duty exemption can support profit margins in the short term, the heavy reliance on international markets makes the sector sensitive to global price fluctuations, currency volatility, and potential changes in government trade policy. Investors should monitor whether this surge in import-led consumption sustains throughout the year and how local textile firms manage their inventory levels once the duty-free window closes. Future updates on domestic production yields and any shifts in global cotton pricing will be critical in assessing the long-term impact on the margins of major textile manufacturers.