Textile Stocks Surge Up to 11% as Government Annuls Cotton Import Duty for Five Months

Government Scraps Customs Duties on Cotton Imports to Boost Supplies for Textile Exporters

The Indian government's decision to scrap customs duties on cotton imports for five months has sent textile makers' stocks soaring. On June 1, companies such as Vardhman Textiles, Gokaldas Exports, Arvind, Welspun Living, Trident, KPR Mill, and Raymond Lifestyle climbed between 2% and 7% as the government exempted all customs duties on cotton imports till October 30, 2026.

According to a notification by the finance ministry, the import duty exemption will be effective from June 1, 2026. This move is expected to increase the availability of cotton for the Indian textile sector, reduce input costs across the textile and apparel sector, and provide a targeted relief to manufacturers and consumers. The ministry also stated that the measure is anticipated to have a positive impact on the performance of the domestic textile industry, especially the small and medium enterprises.

Industry bodies have welcomed the decision, terming it a "much-needed relief" for the apparel sector. The Confederation of Indian Textile Industry has welcomed the Central Government's decision to temporarily remove the 11% import duty on cotton from June 1 to October 31. The move comes as India targets $100 billion in textile and apparel exports by 2030.

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The Apparel Export Promotion Council (AEPC) stated that the decision will help augment the availability of cotton for the Indian textile and apparel sector and provide much-needed relief to the entire value chain. AEPC Chairman A Sakthivel noted that the decision will particularly benefit small and medium enterprises, which have been facing challenges due to the sharp increase in cotton and yarn prices.

Sakthivel further appealed to all spinning mills to pass on the benefits of lower cotton costs by rationalising yarn prices. This will help stabilise the entire textile value chain and enable garment exporters to secure and execute export orders more competitively in the coming months. The government's last year decision to allow duty-free cotton imports from mid-August through the end of December helped drive imports to a record 4.7 million bales in the current marketing year, which began last October 1.

Cotton is largely grown in rain-fed areas in India, and any disruption to monsoon rains from an El Nino weather pattern could reduce output from the new crop being planted from June and boost import demand. In this scenario, the government could extend the duty-free import window beyond October, as it did last year.

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