The move seeks to ease raw material costs for domestic textile and apparel manufacturers amid tight supplies due to the West Asia war, while supporting the competitiveness of the sector.
Raw cotton imports currently attract an effective duty of 10.5%, comprising 5% basic customs duty, 5% agriculture infrastructure and development cess, and 0.5% social welfare surcharge on the customs duty component.
India’s textile industry mostly uses domestic cotton, but it imports long-staple varieties mainly from the US, Egypt and Australia, and some from Brazil.
Mint reported on 28 April that the government was considering exempting cotton imports from duty to support the domestic textile industry.
This is the second such intervention after the government exempted the commodity from import duty till 31 December 2025.
According to Directorate General of Foreign Trade (DGFT) data, India’s raw cotton imports surged 54.6% year-on-year to $1.86 billion in FY26, while exports fell 33.9% to $436.35 million
The textile and apparel sector is one of India’s top export earners, accounting for around 8-10% of the country’s total merchandise exports.
Amid weak global demand and pricing pressures, India’s exports of readymade garments fell to $15.81 billion in FY26 from $16.01 billion in FY25, registering a marginal decline of 1.2%, according to government data.
Overall textile and apparel exports declined 2.2% year-on-year to $35.7 billion in FY26 from $36.6 billion in FY25, reflecting weakness in some key overseas markets despite resilient demand for several product categories. However, in rupee terms, total textile exports, including handicrafts, rose 2.1% to ₹3.16 lakh crore in FY26 from ₹3.10 lakh crore in the previous fiscal, according to an official statement.
The move comes at a time when the textile industry has been seeking easier access to imported cotton to bridge supply gaps and moderate raw material costs. Cotton is the principal raw material for India’s spinning and textile sector, which contributes significantly to exports and employment.
“The government’s decision may benefit textile mills, but it comes at a time when cotton farmers are already facing pressure from rising input costs and volatile prices,” said Ganesh Nanote, a cotton farmer from Maharashtra’s Vidarbha region. “Allowing duty-free imports could weaken demand for domestically produced cotton and put further pressure on market prices, especially if arrivals increase during the marketing season. The government should ensure that the interests of farmers are not sacrificed in an effort to support the textile industry.”
The industry has hailed the move, saying that the temporary duty exemption would lower input costs, improve cotton availability and enhance the competitiveness of Indian textile and apparel exports.
“The decision will particularly benefit small and medium enterprises, which have been facing challenges due to the sharp increase in cotton and yarn prices,” said A. Sakthivel, chairman of Apparel Export Promotion Council (AEPC).
Amid the ongoing global volatility, the import duty was acting as a major hindrance to the Indian textile and apparel sector. “…our major Asian competitors already have duty-free access to cotton,” said Ashwin Chandran, chairman of industry body Confederation of Indian Textile Industry (CITI).
