India may extend duty-free cotton imports as domestic output faces sharp decline

India's cotton sector faces a significant contraction, with production estimates for 2026-27 pointing to a decline of 12-18% from current levels. Output is projected to fall to approximately 29 million bales, according to government assessments, creating potential supply constraints across the country's textile industry.

In response to the anticipated shortfall, the central government is weighing options to extend duty-free cotton imports beyond their current expiration date, with December emerging as a potential cutoff point. The measure aims to ensure adequate raw material availability for domestic mills and textile manufacturers while preventing sharp price escalations.

The production decline reflects challenges facing India's cotton farming sector, driven by factors such as weather patterns and agricultural pressures. By maintaining an open import regime, policymakers seek to bridge the gap between domestic demand and reduced local supply without imposing excessive tariff burdens on industry.

The proposed extension would provide relief to spinning mills and exporters dependent on consistent cotton availability. Such steps are viewed as critical to maintaining India's competitive position in global textile markets while supporting domestic manufacturers through a period of supply tightness.