India Extends Cotton Import Tax Break Through December 31, 2026

India’s cotton mills have two more months to buy overseas fibre without import tax: the Centre extended the exemption through December 31, 2026. The Finance Ministry’s October 30 notice moves the deadline from October 31, continuing a break that removed an 11% duty. The decision comes as industry estimates put this season’s crop below 29 million bales, against expected use of more than 34 million. ^1,2

That gap is driving the extension. In May, the government exempted imported cotton from customs duty and the Agriculture Infrastructure and Development Cess, with the relief initially set to end October 31. Its latest notice moves that date to December 31 without changing the rest of the arrangement. Cotton prices have stayed above Rs 9,000 per 100 kg, higher than the new season’s minimum support price of Rs 8,717. ^1,4

Those prices matter to spinning mills, fabric makers and garment producers because cotton makes up a large share of their material costs. Removing import taxes gives them another source when local cotton is scarce or too costly, and may help small and medium firms manage costs. It could also put pressure on local growers if imported cotton is cheaper. The benefit for shoppers depends on whether manufacturers pass on lower costs. ^1,6,8

Those competing pressures come as India’s cotton imports have already risen 63% year on year to $1.1 billion in the first six months of the financial year. The extension aims to improve supply and ease costs, but it does not guarantee a surge in foreign buying. High freight costs, global prices and a weaker rupee can make imports less attractive. The current exemption ends on December 31, 2026. ^1,8