No Significant Cost Advantage on Imported Cotton Despite Duty Removal: CAI
New Delhi. According to the latest market data from the Cotton Association of India (CAI), imported cotton has not become significantly cheaper than domestic cotton, despite the temporary removal of the 11 percent import duty on cotton in India.
According to the CAI, cotton prices in the Indian and global markets remain at roughly similar levels. Consequently, the decision to import by textile mills will depend not merely on price, but on factors such as fiber quality, availability, and timely supply.
Data for the week ending June 26 shows that the average price of Indian cotton stood at 79.50 US cents per pound on a C&F Far East basis, inclusive of 6.00 cents per pound in freight charges. Meanwhile, the average price of the international benchmark, the Cotlook A Index, was recorded at 80.00 US cents per pound.
Thus, the price of Indian cotton was lower by only 0.50 US cents per pound, or approximately ₹400 per candy (about 0.63 percent). The CAI states that this marginal difference is easily offset by costs such as insurance, port handling, inland logistics, and other additional expenses. Therefore, textile mills are unlikely to derive any significant cost advantage from importing foreign cotton.
It is noteworthy that the Central Government suspended the 11 percent import duty on cotton from June 1 to October 30, 2026, with the aim of increasing raw material availability for the textile industry. However, recent market analysis indicates that this policy has had a limited impact on the actual cost of imported cotton.
The CAI clarified that despite the removal of the duty, importers still incur expenses related to freight, insurance, port handling, domestic transportation, financing, and exchange rates. These additional costs completely wipe out the marginal price difference between domestic and imported cotton.
The association also noted that, this week, Indian cotton traded at a premium of 8.20 US cents per pound over ICE December 2026 cotton futures. However, this spread reflects the difference between India's spot market and forward futures contracts and is not directly linked to the competitiveness of imported cotton.
