Here's why Gokaldas Exports, Welspun Living and other textile stocks are in focus on Monday

Shares of textile companies such as Gokaldas Exports, Arvind Limited, Welspun Living and Vardhman Textiles are expected to remain in focus on Monday, June 1, after the government scrapped customs duty on cotton imports for five months to improve the availability of contamination-free cotton for exporters amid strong global demand for yarn.

The government announced on Saturday that the existing 11% import duty on cotton will remain suspended until October 30.

The move by the world's second-largest cotton producer is expected to support the textile industry by improving access to high-quality cotton. However, industry participants believe the duty waiver may not lead to a jump in imports, as the recent depreciation of the rupee has made imported cotton slightly costlier than domestic supplies.

India's textile sector has been grappling with higher input costs and supply-chain disruptions linked to the Iran conflict. The government said the duty exemption would help domestic manufacturers, particularly small and medium enterprises, by ensuring better cotton availability.

Industry officials, however, said that domestic cotton prices remain among the most competitive globally and that supplies from the current crop are adequate, limiting the need for imports.

"At current price levels, imports are not economically attractive," Vinay Kotak, president of the Cotton Association of India, told Reuters.

According to Kotak, export-oriented mills that require contamination-free cotton could import around 600,000 bales during the duty-free window.

Industry officials said imports, if any, are likely to come from countries such as Australia, Brazil, the United States and several African nations that currently have surplus supplies.

India had similarly allowed duty-free cotton imports from mid-August to the end of December last year, helping imports rise to a record 4.7 million bales in the current marketing year that began on October 1.

Market participants will also closely track the progress of the monsoon season. Since cotton cultivation in India is largely rain-fed, any weather disruptions linked to an El Nino pattern could affect the new crop being sown from June, potentially increasing import requirements.

A New Delhi-based dealer with a global trading house told Reuters that if crop prospects weaken, the government may consider extending the duty-free import window beyond October, similar to last year.

With Reuters inputs