Cotton Import Duty Exemption Extended to 2026 End

Duty Exemption on Cotton Imports Extended

The Central Board of Indirect Taxes and Customs (CBIC) has extended the exemption from Basic Customs Duty (BCD) and Additional Duties of Customs (AIDC) on cotton imports classified under HSN 5201 until 31 December 2026. The move, announced in Notification No. 35/2026-Customs, is aimed at ensuring adequate raw material supply to the domestic textile sector.

The exemption, originally introduced in 2023 to address domestic supply shortages, has been periodically extended. It benefits spinning mills and export-oriented apparel units by reducing input costs. The government cited stable but insufficient domestic cotton production and rising international demand as rationale for the extension.

Implication for Traders

Importers of raw cotton must ensure goods are correctly classified under HSN 5201 and accompanied by origin certificates where applicable. While the exemption reduces compliance cost, vigilance is required to avoid misclassification or diversion into restricted categories. Duty savings may also influence trade negotiations with cotton-exporting nations.