use lib 'c:\h\COTS\Perl\lib\';
Should do what you want. This is the preferred interface to @INC, rather than modifying it directly.
Update: It occurred to me that your entire perl distribution might be in C:\h\COTS. If so, you likely want to modify your installation of perl to reflect that. I'm not clear on where stuff is in Windows, but you likely have a Perl.ini or something like that, where the default @INC is defined. Append to (or replace) the directories in the .ini with your path, and it should be good.
That is, assuming the machine is your own and doing the above wouldn't break anyone else's perl :)
Update: Silly double-quotes. They're single now. Thanks, chromatic!