Centre scraps cotton import duty till October 30 to help textile industry

The Union government has waived customs duty on cotton imports for a five-month window starting June 1, 2026 and ending October 31, 2026. The notification, issued by the Union Finance Ministry, is aimed at making cheaper raw cotton available to India's textile and apparel sector at a time when global trade conditions remain volatile.

Cotton import duty had been brought back from January 1, 2026 after a short waiver between August and December 2025. Officials describe the new exemption as a temporary, targeted relief that should lower input costs for spinners, weavers and garment makers, including small and medium enterprises, while still protecting Indian cotton farmers.

Industry body Confederation of Indian Textile Industry (CITI) welcomed the move. It pointed out that the 11 per cent duty had been pushing Indian costs above those of Bangladesh, Vietnam and Sri Lanka — countries that already enjoy duty-free cotton access and compete with India in price-sensitive global apparel markets.

The pressure on India's textile exports is visible in trade data for 2025-26. Readymade garment exports fell 1.4 per cent on year to USD 15.8 billion. Cotton yarn, fabrics, made-ups and handloom exports were down nearly 4 per cent at USD 11.58 billion. Total textile and apparel exports slipped 2.2 per cent to USD 35.79 billion. The country has set an ambitious target of USD 100 billion in textile and apparel exports by 2030.

The exemption also aligns with India's growing Free Trade Agreement (FTA) network. FTAs with the United Arab Emirates and Australia are already in force, the agreement with Oman comes into effect on June 1, 2026, and a deal with the United Kingdom is expected soon. Cheaper raw cotton should help Indian exporters use these new market openings more effectively.

For exam purposes, the move highlights how India uses customs duty as a policy lever to balance the interests of farmers (who want price support for raw cotton) and processors (who want low input costs). It also shows the link between trade policy, FTAs, and the broader goal of expanding labour-intensive manufacturing exports under schemes such as the PLI for textiles.