Cotton Imports Will Set a Record Again. The Duty Window Closes on 31 December.
India's cotton balance for 2026-27 does not close on its own crop. Trade estimates put production near 280 lakh bales against consumption of 365 lakh bales. The gap, roughly 85 lakh bales, has to come from imports or stocks, and on Friday the government gave mills two more months to bring it in duty-free. For a spinning mill planning its winter buying, the policy date is now the procurement calendar: the window closes on 31 December, whether the cotton has landed or not.
Two more months, and not a day more
The Centre extended the customs duty exemption on cotton imports till 31 December 2026, through Notification No. 35/2026-Customs dated 30 October. The exemption, which removes an 11 per cent duty, had run from 1 June and was due to lapse on 31 October. Nothing in the notification promises a further extension. A mill that contracts in December on the assumption of another renewal is speculating on policy, not buying fibre.
The Cotton Association of India's president, Vinay N Kotak, made the trade case plainly: the exemption lets mills access contamination-free cotton and keeps Indian textile products competitive against Bangladesh and China. That is the quality argument. The volume argument is bigger, and it sits in the balance sheet below.
The balance: 280 in the field, 365 at the spindle
Atul Ganatra of the Radhalakshmi Group laid out the arithmetic the trade is working with. Domestic production stood at about 330 lakh bales in 2025-26; the current crop is seen around 280 lakh bales for 2026-27. Consumption is estimated at 365 lakh bales this year, up from 315 lakh bales last year. These are trade estimates, not official statistics, and they will move as arrivals build. But even with generous error bars, a crop near 280 against demand near 365 leaves imports carrying the season.
| Cotton balance, lakh bales of 170 kg | 2025-26 | 2026-27 (trade estimate) |
|---|---|---|
| Domestic production | ~330 | ~280 |
| Consumption | 315 | 365 |
| Imports | 71 (record) | 71 or more expected |
Source: trade estimates reported by BusinessLine, 31 October 2026. Farmioc.
Imports already show it. India brought in a record 71 lakh bales in 2025-26, up from 41 lakh bales the year before, and trade sources expect 2026-27 to equal or pass that figure. Demand is not standing still either: polyester and viscose prices have risen around 35 per cent since the war in West Asia broke out, pushing mills from synthetic yarn back toward cotton yarn, while spindle capacity keeps expanding in Odisha, Chhattisgarh, Madhya Pradesh and Gujarat.
Domestic prices eased. They did not soften.
The extension took some heat out of the domestic market, and only some. Prices eased around ₹500 per candy to ₹65,700–66,200 per candy of 356 kg, and the Cotton Corporation of India cut its sale prices by ₹400 on Monday for the 2025-26 crop. Brazilian cotton, delivered to the mill, works out around ₹67,000 per candy — above the domestic quote, which tells you the duty window is about availability and quality, not a cheap flood.
At the farm gate there is no distress selling to buy into. Kapas ruled at ₹9,200–9,300 per quintal in Raichur, ₹8,900–9,000 in Telangana and ₹8,500–8,800 in Maharashtra, all above the ₹8,267 per quintal MSP for medium staple cotton in 2026-27. Arrivals remain thin at 70,000–80,000 bales a day, below what the trade expected, with farmers holding back a smaller crop. The trade expects arrivals to pick up after Deepavali. Until they do, domestic supply will not rescue a mill that waited.
The catch inside the extension
Two months sounds generous until you price a shipment. Anand Popat of CotYarn Trade Link expects import premiums to rise 1–2 cents per pound on the extension, and notes the window is too tight for fresh contracts from far origins such as Brazil to arrive in time. The likely gainers are multinationals holding cotton in ports near India — Singapore, Malaysia, Indonesia — bought and positioned before the extension was announced. A Raichur sourcing agent made the same point from the buying side: three months would have allowed smooth shipments; two months rewards whoever already owns nearby stock.
What happens after 31 December is the open risk. If the duty returns while the crop estimate stays near 280 lakh bales, mills that deferred buying will compete for domestic arrivals at MSP-plus prices with no duty-free alternative. If arrivals surge and prices sag toward MSP, the calculation flips. Either way, the variables to watch are the ones traders named: ICE futures, the rupee, and the daily arrival pace once the festival break ends.
What a mill does with this
Cover the share of winter consumption that needs imported, contamination-free fibre inside the window, and price it landed, not contracted — cotton that reaches an Indian port after 31 December does not get the exemption. Keep domestic buying layered against the post-Deepavali arrival build rather than chasing thin early arrivals above ₹66,000 a candy. And treat 1 January as a hard price regime change in every forward yarn quote written this month. Farmioc's PriceHub tracks cotton prices, arrivals and trade flows across the season, and DataStore brings the same series into the credit and procurement dashboards lenders and mills plan against.