When the same policy lever gets pulled twice in twelve months, it stops being relief — and starts looking like a structural tilt.
India’s cotton import duty was scrapped for the second time in under a year when the Finance Ministry notified a full exemption from both basic customs duty and the Agriculture Infrastructure and Development Cess on cotton imports, effective June 1 through October 31, 2026. The previous waiver ran from August 2025 through December 2025, making this the third extension of zero-duty cotton access in barely ten months. For textile mills, that is welcome continuity. For cotton growers, the pattern carries a documented sting.
During the first waiver window in late 2025, roughly three million bales of cotton entered India within just three months, according to trade sources. Domestic cotton prices fell below the government’s own Minimum Support Price in several growing regions, forcing farmers to offload produce at a loss. The All India Kisan Sabha condemned the move at the time, arguing that small Indian cotton growers — whose per-hectare costs have risen steadily — cannot absorb the price pressure created by subsidised production in countries like the United States. That criticism has resurfaced almost word for word in response to the June 2026 notification.
The numbers explain why. Average domestic cotton prices currently sit near ₹8,250 per quintal. The government recently hiked the MSP for cotton by ₹557 per quintal for the 2026–27 kharif season, placing the floor price in the neighbourhood of ₹7,600–7,700. That leaves only a seven-to-eight percent cushion between the market rate and the MSP — thin enough that any sustained import flow could erase it. Meanwhile, the Cotton Corporation of India is believed to hold four to five million bales purchased through MSP operations, and an estimated four million bales remain with growers awaiting better prices. A price decline would compress both pools simultaneously.
Textile counters responded in the opposite direction. On the first trading session after the announcement, Vardhman Textiles rose roughly six percent, Arvind Limited gained over six percent to touch a 52-week high, and Indo Count Industries climbed around eleven percent. The rally reflects genuine margin relief: cotton is the single largest input cost for spinning and weaving companies, and the 11 percent duty removal widens the gap between landed import prices and domestic procurement costs. For small and medium textile enterprises struggling with elevated yarn prices, the waiver offers five months of breathing room on raw material sourcing.
The tension, however, is structural rather than seasonal. A duty that has now been waived for roughly fifteen of the last twenty-two months is arguably no longer functioning as a protective measure for farmers — it has become a switch the government flips depending on which end of the value chain is under louder pressure. Investors holding textile stocks benefit from the current cycle, but the policy’s repeated reversal introduces its own uncertainty: if cotton grower distress intensifies ahead of state elections or kharif sowing, the duty could snap back before October, as it has been reimposed in the past. The Cotton Corporation’s inventory position and the pace of actual imports over June and July will be the earliest signals of which way this swings.
This article is journalism and educational commentary, not investment advice. The author is not a SEBI-registered Research Analyst. Figures should be independently verified against official filings before any financial decision.
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