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Cotton Import Duty Exemption Extended Till Dec. 31: How This Benefits MSMEs, Textile Sector

The move is designed to ensure an uninterrupted supply of cotton for textile mills and garment manufacturers, insulating them from volatile price spikes.

Cotton Import Duty Exemption Extended Till Dec. 31: How This Benefits MSMEs, Textile Sector

In a major relief to the domestic textile and apparel industry, the Central Government has extended the customs duty exemption on cotton imports by two months, making it valid until December 31, 2026.

The extension, aimed at boosting the domestic availability of raw materials and softening input costs, was earlier slated to expire on October 31, 2026.

The Ministry of Finance notified the decision via an extraordinary Gazette notification (No. 35/2026 - Customs) issued on Friday, October 30. Exercising powers under Section 25(1) of the Customs Act, 1962, read with Section 124 of the Finance Act, 2021, the Department of Revenue amended its earlier May 30 notification (No. 19/2026-Customs) to substitute the October deadline with December 31, 2026.

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The move is designed to ensure an uninterrupted supply of cotton for textile mills and garment manufacturers, insulating them from volatile price spikes. Industry participants-particularly Micro, Small, and Medium Enterprises (MSMEs) that have faced cost pressures across value chains-are expected to benefit directly from lower raw material expenses.

According to officials, the duty-free import window will provide targeted cost relief to manufacturers and end-consumers while maintaining a balance with the economic interests of domestic cotton farmers. The increased availability of raw fibre in the open market is anticipated to improve operational capacity, output performance, and price competitiveness across the entire textile and garment ecosystem through the year-end.

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