India’s decision to suspend the 11 percent import duty on cotton was expected to provide immediate relief to textile manufacturers struggling with volatile raw material costs.
However, nearly a month after the policy came into effect, imported cotton remains only marginally cheaper than domestic supplies, limiting its impact on sourcing decisions across the country’s spinning and textile sectors.
According to the latest market assessment from the Cotton Association of India (CAI), Indian cotton prices during the week ending June 26 stood almost at parity with international benchmarks. The domestic ICS-105 cotton benchmark averaged 79.50 US cents per pound on a C&F Far East basis, while the global physical benchmark, the Cotlook A Index, averaged 80.00 US cents per pound.
The resulting price difference of only 0.50 cents per pound — equivalent to approximately ₹400 per candy or just 0.63 percent — is too small to offset additional import-related expenses such as insurance, inland transportation, port handling charges, financing costs, and currency fluctuations. As a result, importing cotton currently offers little financial advantage to Indian mills.
The Indian government temporarily removed the duty from June 1 to October 30, 2026, aiming to improve cotton availability and ease pressure on the country’s textile value chain. The exemption covers both customs duty and the Agriculture Infrastructure and Development Cess (AIDC), effectively reducing the tariff burden by around 11 percent.
Despite the policy shift, market participants indicate that sourcing decisions are continuing to depend more on fibre quality, contamination levels, availability, and delivery timelines rather than headline prices.
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Export-oriented spinning mills, particularly those supplying premium yarn and apparel manufacturers, may still turn to overseas suppliers for contamination-free cotton varieties not readily available in the domestic market.
Industry estimates suggest imports during the duty-free window could reach around 600,000 bales, primarily from Australia, Brazil, the United States and selected African origins.
The latest data also highlights a premium of approximately 8.20 cents per pound for Indian cotton over the ICE December 2026 futures contract. However, analysts note that this comparison reflects the gap between India’s spot market and forward futures pricing rather than indicating a competitive advantage for imported fibre.
For Bangladesh’s textile and apparel industry, developments in India’s cotton policy remain significant. India is one of the region’s largest cotton suppliers and an important source of yarn for Bangladeshi manufacturers.
A substantial increase in Indian imports could have tightened global cotton availability and pushed international prices upward. The current price parity, however, suggests that global cotton trade flows may remain relatively stable in the near term.
The effectiveness of India’s duty waiver may depend less on tariffs and more on the performance of the upcoming cotton harvest and monsoon season. Any production shortfall or weather-related disruptions could quickly alter the import equation and revive demand for overseas cotton later in the year.