Tue Dec 30,
Insights
Indian government is unlikely to extend duty-free cotton imports beyond December 31, 2025, despite textile industry demands to remove the nearly 11 per cent duty.
Policymakers remain cautious as domestic cotton availability is adequate and CCI procurement may rise sharply.
Extending the window could depress prices, raise MSP-linked fiscal costs, hurt farmer incomes and trigger political resistance.
The Indian government is unlikely to extend the duty-free import window for cotton beyond December 31, 2025, despite sustained demands from the domestic textile industry for an extension and the complete removal of the nearly 11 per cent import duty, industry sources said.
Speculation has emerged within trade circles that the government may consider granting additional time for duty-free cotton imports. However, there is currently no formal proposal under consideration, and policymakers appear reluctant to prolong the relief.
The government approved duty-free cotton imports in September 2025 following the imposition of 50 per cent tariffs by the US, which disrupted trade flows and added pressure amid strained bilateral relations and protracted trade negotiations.
Sanjay K Jain, managing director of TT Limited and chairman of the ICC National Textiles Committee, told Fibre2Fashion, “The industry has been consistently demanding the removal of import duty so it can access raw material at globally competitive prices. However, I do not personally expect the government to extend duty-free cotton imports when the Cotton Corporation of India (CCI) is actively procuring cotton, and its purchases may reach 100 lakh bales of 170 kg. There will be no scarcity of domestic cotton in the coming months of the current season.”
An extension of duty-free imports would significantly depress domestic cotton prices, triggering higher procurement by the CCI at the minimum support price (MSP). This, in turn, would substantially increase the government’s financial burden.
Jain noted that greater reliance on imports could weaken price realisation for farmers, making the move politically sensitive. With cotton farmers already facing volatility, any policy perceived as favouring imports over domestic procurement is likely to face resistance.
Industry stakeholders argue that removing import duty is necessary to ensure raw material availability and price stability for spinners, particularly amid global supply disruptions. However, the government’s priority appears to remain farmer protection and limiting fiscal exposure through higher MSP procurement.
With farmer unrest remaining a key concern for the Modi government, analysts believe extending duty-free cotton imports could invite political backlash, making a policy extension beyond December increasingly unlikely.