MUMBAI, Nov 11 (Reuters) - India's cotton imports are forecast to climb 9.8% in the new season to a record high, driven by New Delhi's move to allow duty-free overseas purchases and a drop in local output to a 17-year low, industry officials told Reuters.

Higher imports by the world's second-largest cotton producer are expected to support global prices , which are trading near six-month lows.

India's cotton imports could rise to 4.5 million bales in the 2025/26 marketing year, which began on October 1, with nearly 3 million expected to arrive in the December quarter, Atul Ganatra, president of the Cotton Association of India (CAI), told Reuters.

India's imports reached a record 4.1 million bales last year from the U.S., Brazil, Australia and Africa.

"Cotton is a lot cheaper overseas right now compared to local prices, so textile mills are rushing to import it before the end of December," Ganatra said.

New Delhi has extended an exemption for cotton imports from an 11% duty until December 31.

Apart from the exemption, concerns over domestic supply following crop damage are prompting textile mills to turn to higher-quality imported cotton, said a New Delhi-based trader with a global trade house.

Western states Maharashtra and Gujarat, along with southern states Andhra Pradesh and Telangana, received heavy, untimely rainfall in October, damaging cotton crops ready for harvest. Together, these states account for over 70% of India's total cotton production.

India's cotton production in 2025/26 is projected to decline 2.4% from the previous year to 30.5 million bales, the lowest since 2008/09, the CAI estimates.

Some traders are forecasting a steeper decline towards 28 million bales.

The textile industry is one of the largest employers in India, directly employing over 45 million people.

The CAI forecasts demand cotton consumption will drop 4.5% to 30 million bales in 2025/26 amid sluggish export demand.

"Demand from the U.S. has fallen after they slapped on hefty tariffs, forcing many textile units in southern India to scale back their operations," Ganatra said.

The U.S., which takes nearly 29% of India's $38 billion annual textile exports, doubled tariffs on imports from India to as high as 50%, effective August.

(1 Indian bale = 170 kg)