The Central Government, Ministry of Finance (Department of Revenue), has issued Notification No. 35/2026-Customs dated October 30, 2026 (G.S.R. 960(E)), extending the existing customs duty exemption on imports of cotton falling under Customs Tariff Heading 5201 for a further period of two months, up to and including 31 December 2026.
The notification amends Notification No. 19/2026-Customs dated 30 May 2026 (G.S.R. 420(E)), under which the Government had originally granted exemption from the whole of Basic Customs Duty (BCD) and Agriculture Infrastructure and Development Cess (AIDC) on imports of cotton for the period from 1 June 2026 to 31 October 2026.
With the latest amendment, the Government has extended the validity of the exemption until 31 December 2026, thereby allowing eligible cotton imports to continue availing the prescribed customs duty relief during November and December 2026.
Extension of Nil Customs Duty on Cotton Imports Till 31 December 2026
The amendment has been issued in exercise of the powers conferred under Section 25(1) of the Customs Act, 1962, read with Section 124 of the Finance Act, 2021, in the public interest.
Under the amended notification, the words “31st day of October, 2026” appearing in Paragraph 2 of Notification No. 19/2026-Customs have been substituted with “31st day of December, 2026”.
Accordingly, the exemption from Basic Customs Duty and Agriculture Infrastructure and Development Cess will continue to apply to eligible imports of cotton falling under Heading 5201 until the revised deadline.
Importantly, the present amendment only extends the validity period of the existing exemption. It does not modify the description of eligible goods or introduce any new conditions.
Exemption from Both BCD and AIDC
Under the original Notification No. 19/2026-Customs, cotton falling under Customs Tariff Heading 5201 is exempt from:
- Basic Customs Duty (BCD): The whole of the customs duty leviable under the First Schedule to the Customs Tariff Act, 1975.
- Agriculture Infrastructure and Development Cess (AIDC): The whole of the cess leviable under Section 124 of the Finance Act, 2021.
The exemption is specifically in respect of the above two levies. Other applicable import-related taxes or charges, if any, must be examined separately under the relevant provisions.
Major Relief for Textile and Apparel Industry
The extension of the customs duty exemption is expected to provide continued relief to the Indian textile and apparel industry, particularly cotton-dependent manufacturing units, spinning mills, garment manufacturers and micro, small and medium enterprises (MSMEs).
The additional two-month exemption period may help manufacturers secure cotton supplies at competitive prices, reduce input cost pressures and improve raw material availability for domestic production.
The decision could also support the competitiveness of Indian textile and garment manufacturers in domestic and international markets by providing greater flexibility in sourcing imported cotton.
Impact on Cotton Importers and Domestic Manufacturers
The revised exemption period provides additional time for importers and manufacturers to plan cotton procurement and import consignments without the burden of BCD and AIDC on eligible cotton imports.
The continued exemption may benefit spinning mills, textile processing units, fabric manufacturers, apparel exporters and other businesses that utilise imported cotton as an essential raw material.
The measure is also consistent with the Government’s earlier stated objective of improving cotton availability and supporting the textile value chain while keeping domestic farmers’ interests in view.
Important Compliance Advisory for Importers
Importers, customs brokers, textile manufacturers and other stakeholders should ensure that imported goods are correctly classified under Customs Tariff Heading 5201 and satisfy the requirements of Notification No. 19/2026-Customs, as amended.
The exemption will remain available up to and including 31 December 2026, unless the Government issues any further amendment.
The Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/10/Extension-of-Cotton-Customs-duty-exemption.pdf
