Textile stocks rally up to 11% after Centre removes cotton import duty for five months

Textile stocks witnessed strong gains on June 1 after the Centre announced the removal of import duty on cotton for a five-month period, a move aimed at improving raw material availability and supporting the domestic textile industry.

Following the announcement, shares of several textile companies rallied sharply during trading. Indo Count Industries, Gokaldas Exports, KPR Mill, Vardhman Textiles and other textile-related stocks recorded gains of up to 11%, reflecting investor optimism over lower input costs and improved profitability prospects.

The government’s decision suspends the import duty on cotton from June to October 2026. Industry participants have long argued that elevated domestic cotton prices were affecting competitiveness, particularly for export-oriented textile manufacturers that rely heavily on stable raw material costs.

Why does cotton duty matter?

Cotton is one of the most important raw materials for India’s textile and apparel sector. When domestic cotton prices rise significantly above international prices, manufacturers often face higher production costs, which can reduce profit margins and affect export competitiveness.

The temporary removal of import duty is expected to allow textile companies to source cotton at more competitive global prices, helping reduce input cost pressures.

Market participants said the decision could particularly benefit spinning mills, garment exporters and home textile manufacturers that have been dealing with fluctuations in cotton supply and pricing over recent months.

Stocks that gained

Among the major gainers, shares of Indo Count Industries and Gokaldas Exports rose sharply after the announcement.

Other textile companies, including KPR Mill, Vardhman Textiles and several sector peers, also recorded notable gains during the session as investors reacted positively to the policy move.

Impact on the textile sector

India is one of the world's largest producers and exporters of textiles and garments, making cotton prices a critical factor for industry performance.

Industry bodies have previously urged the government to ensure adequate cotton availability and maintain price stability, arguing that high raw material costs can weaken India's position in global export markets.

The latest decision is expected to provide short-term relief to manufacturers, especially exporters competing with producers in countries that have access to lower-cost cotton. Analysts said the move could help improve margins if international cotton prices remain favourable during the duty-free period.

The government has not yet indicated whether the duty suspension will be extended beyond October. For now, textile companies are expected to closely monitor global cotton prices and procurement opportunities during the five-month window.