India’s textile industry is urging the government to extend the duty-free window for raw cotton imports beyond October 31, 2026. Facing a 60% surge in yarn costs and declining domestic output, exporters warn that supply shortages could impact global competitiveness. The government must balance these industry needs with concerns from domestic farmers, who fear that continued duty-free imports could lower crop prices during the harvest season.
The Indian textile industry is calling for a six-month extension of the duty-free window for raw cotton imports, which is currently scheduled to expire on October 31, 2026. Industry bodies, including the Tiruppur Exporters Association, are lobbying the federal government to maintain the exemption, arguing that it is essential for stabilizing production costs.
The push comes as the sector grapples with significant cost pressures. While raw cotton prices have climbed approximately 20% in 2026, the price of cotton yarn has seen a steeper rise of 60%. For apparel exporters, these higher costs are eating into profit margins, making it difficult to remain competitive in global markets where price sensitivity is high.
A primary driver of this request is the ongoing decline in domestic cotton production. For the 2025-26 season, output dropped to an estimated 290 lakh bales. This continues a downward trend that has persisted since the 2021-22 season. Unfavorable rainfall in key growing regions such as Gujarat, Telangana, and Maharashtra has created uncertainty regarding the quality and quantity of the upcoming harvest, leaving mills concerned about supply stability.
The debate over extending the duty-free status involves a complex trade-off. Agricultural groups are cautious about continuing the waiver during the October harvest period. They argue that if imported cotton continues to enter the country without taxes, it could suppress demand for locally grown cotton, potentially hurting the price realization for farmers. In response, industry representatives maintain that global prices are high enough that imports are meant to bridge supply gaps rather than drive prices down to harmful levels.
For investors monitoring the textile sector, the government’s decision will be a critical monitorable. Textile companies rely on predictable input costs to manage their operating margins. If the government decides against the extension, spinning and apparel manufacturing companies may face rising raw material costs, which could lead to margin pressure if they are unable to pass these expenses on to customers.
The immediate next step for the market is to track the government's stance as the October 31 deadline approaches. Investors should also watch production data from the upcoming harvest, as it will determine whether domestic availability is sufficient to support the industry without heavy reliance on imports.