Duty Exemption End Boosts Cotton Prices

07-Jan-2026 11:10 AM

Ahmedabad:  The central government's failure to extend the exemption on the 11 percent customs duty on cotton imports beyond December 31, 2025, has automatically ended duty-free imports from January 1, 2026. 

This has led to a strengthening of cotton prices in the domestic market. Cotton prices have risen by more than 5 percent in the last six days.

However, the likelihood of further price increases is diminishing as Bangladesh, the largest buyer of Indian cotton yarn, is planning to impose customs duty on yarn imports.

A crucial meeting of the Bangladesh Trade and Tariff Commission was held on January 5th, where a proposal to impose a 20 percent customs duty on cotton yarn imports was discussed, but no official announcement has been made yet.

The Cotton Association of India (CAI) says that if Bangladesh implements a 20 percent import duty on cotton yarn, it will put pressure on the Indian yarn market.

Bangladesh has been the largest buyer for the past few years, accounting for approximately 30 percent of India's total cotton yarn exports.

Any disruption to this trade will put pressure on cotton prices. Meanwhile, domestic cotton prices have increased by Rs 400-500 per quintal, but they are still below the Minimum Support Price (MSP) of Rs 8100 per quintal.