Cotton imports have surged as traders take advantage of the zero-duty import window, boosting supplies but impacting domestic cotton prices and market dynamics.
India imported cotton at a record pace, procuring nearly 3 million bales in the December quarter, as buyers rushed to take advantage of the duty-free window till the year-end.This could lead to a second consecutive year of record imports in FY26 amid lower domestic production, rain-damaged crop quality, and higher local prices.
Trade bodies, global merchants, and textile mills estimate that total imports during the October-September cotton marketing season could reach 5-6 million bales, depending on government policy, US tariffs, and trade pacts with the EU and the UK. Acting on a longstanding demand from the cotton textile and yarn industry, the government scrapped a 11% import duty on cotton from August 19 till December 31.
The industry had anticipated shortages as the area under cotton cultivation has been declining for the past two years. Cotton acreage fell 3.5% in kharif 2025 from the year earlier, adding to a sharper 9.5% decline in kharif 2024 over 2023.”The top 10 mills in the country have covered their cotton requirements until May or June through imports,” said Atul Ganatra, chairman, Radhalakshmi Group and former president of the Cotton Association of India (CAI). In addition to the strong imports in the first quarter of the cotton marketing year, the industry expects another 2-3 million bales to be imported in the rest of the year.
A key reason is the widespread damage to the quality of Indian cotton due to adverse weather conditions. “The quality of at least 50% of this year’s cotton production has been affected, which is reflected in parameters such as strength and shine,” said K Selvaraju, secretary general of the Southern India Mills Association (SIMA).
Export commitments require specific grades of cotton that are contamination-free and of extra- long staple (ELS), for which India depends on imports. “We will import 300,000 bales of Australian cotton between June and August. At least 500,000 bales of duty-free extra-long staple cotton will be imported by September to meet our normal demand for this variety.
More than 500,000 bales may also come from Africa, which attracts lower duties,” said Ganatra. Cotton imported by processing mills for their captive consumption attracts only 4% import duty. Large mills can import at lower effective duties when domestic prices remain higher than international prices.
Meanwhile, state-owned Cotton Corporation of India (CCI) is holding more than 20% of this year’s crop through price support procurement at the minimum support price.
News Courtesy : Economic times