Cotton Imports Exempted from Duties for 42 Days
This notification comes into force from Tuesday and shall remain in force up to September 30, 2025
Chennai: The government has exempted cotton imports from basic customs duty and Agriculture Infrastructure and Development Cess for a 42-day period. While the industry has been asking the government to make cotton imports duty-free to make Indian textile exports competitive, the 42-day exemption is just to cool off prices ahead of the arrivals of the new crop.
“….hereby exempts the goods…when imported into India, from the whole of the duty of customs leviable thereon under the First Schedule to the Customs Tariff Act and from the whole of the Agriculture Infrastructure and Development Cess…” the Finance Ministry said in its release. This notification comes into force from Tuesday and shall remain in force up to September 30, 2025.
Cotton imports had surged 107.4 per cent, rising from $579.2 million in FY2024 to $1.20 billion in FY2025 and India bought cotton worth $258 million from Australia, $234 million from the US, $180 million from Brazil and $116 million from Egypt.
Since February 2021, imports were subject to an 11 per cent duty, including 5 per cent Basic Customs Duty and 5 per cent Agriculture Infrastructure & Development Cess. “The measure is a time-bound stopgap to stabilize markets before the new crop arrives. The waiver is expected to help mills facing high input costs and support yarn and fabric exporters struggling with competitiveness, particularly ahead of India’s festival season,” said GTRI.
Cotton prices in India have remained higher to international rates. The supply crunch and MSP have been supporting domestic prices. Cotton coverage under Kharif crop was down by 3.24 lakh hectares to 107.87 lakh hectares.
However, the industry has been asking the government to exempt the quantity imported to fill the supply gap from duties. This can make Indian textile products competitive in the overseas markets, especially in the US as India faces higher tariffs compared to its competitors, including Bangladesh, China, Vietnam and Cambodia.
"CITI has long been requesting that the import duty on cotton be removed to help domestic cotton prices align with international prices. We, therefore, greatly welcome this measure taken by the authorities even though the relief is only available temporarily," CITI Secretary General Chandrima Chatterjee said.
“This could be a windfall for the cotton in transit shipments. But it is a very short period for ordering new shipments,” said Sanjay Jain, chair, ICC National Textiles Committee.
