India is expected to extend duty-free cotton imports for another two months through December, three government and industry sources said on Monday, October 26, in a move that could cut costs for textile mills, curb domestic prices and boost imports from the US, Brazil and Australia, Reuters reported. The government is expected to issue an order after inter-ministerial consultations; no final order had been issued at the time of reporting.

Source: Reuters via TradingView

India, the world's biggest cotton producer after China, had waived the 11 per cent customs duty on cotton imports for five months from June 1 through October 31 to boost supplies during the lean season. Domestic prices usually ease when new-season arrivals begin in October, but have remained firm this year amid lower output prospects, prompting mills to seek a longer duty-free window, The Hindu BusinessLine reported.

Source: The Hindu BusinessLine

Domestic cotton prices are above Rs 9,000 per 100 kg — yaani Rs 9,000 for one quintal (100 kg) — higher than the government-set floor price of Rs 8,717 for the new season, Reuters reported via The Hindu BusinessLine.

India's cotton output is likely to fall below 29 million bales in 2026-27 — yaani below 2.9 crore bales — against demand of more than 34 million bales, according to trade estimates cited in the reports. A tight stock-to-use ratio of about 31 per cent, its lowest in five years, supported the case for extending the exemption, said Dipanshi Agarwal, principal analyst at S&P Global, while noting additional imports could weigh on domestic prices.

The finance, commerce and textile ministries did not immediately respond to emailed requests for comment, Reuters reported. Analysts said additional imports could support global cotton prices and help curb domestic rates, which have risen after patchy monsoon rains cut crop prospects.