Cotton Duty Waiver Lifts Textile Stocks Into Q2

Cotton Duty Exemption: What Changed and Why It Matters Effective June 1, 2026, India removed the customs duty on raw cotton imports through October 31, 2026. The combined levy being waived is 11%, covering Basic Customs Duty and the Agriculture Infrastructure and Development Cess. Five months isn't long, but the timing is deliberate: this window covers peak procurement ahead of the winter production cycle, when spinning mills lock in raw material costs that flow directly into Q2 and Q3 FY27 margins. The market response was immediate. [Arvind Ltd](/stock/ARVIND) (NSE: ARVIND) hit a 52-week high on the announcement date. [Vardhman Textiles](/stock/VARDMNPOLY) (NSE: VARDMNPOLY) and [Nitin Spinners](/stock/NITINSPIN) (NSE: NITINSPIN) both gained over 5% intraday. That's institutional money repricing earnings estimates in real time, not noise. Cotton typically accounts for 50 to 70% of raw material costs for spinning mills. An 11% duty removal on imports doesn't translate to an 11% cost reduction, since domestic cotton prices still set the floor. What it does is cap the ceiling. Mills sourcing imported cotton from the US and Brazil, where spot prices have been competitive, now face meaningfully lower input costs through the exemption window. Stock-Level Impact Across the Value Chain The exemption's benefit isn't uniform. It's most direct for spinning-heavy businesses and garment exporters with flexible sourcing. [Nitin Spinners](/stock/NITINSPIN) (NSE: NITINSPIN) is the clearest beneficiary. It's a pure-play spinning mill with high cotton exposure and thin margin structures where input cost relief directly expands EBITDA. The market already priced in some improvement with that 5%+ move on announcement day. But if imported cotton costs stay suppressed through October, there's a credible case for Q2 FY27 EBITDA margins expanding 150 to 200 basis points versus prior guidance. [Vardhman Textiles](/stock/VARDMNPOLY) (NSE: VARDMNPOLY) is a more integrated business, cove...