Cotton Import Duty Exemption Extended Till December
The government’s move is expected to give a big relief to textile manufacturers and consumers alike in lowering input costs across the textile value chain, encompassing yarn, fabric, garments, and made-ups etc.
New Delhi: A day after the United States imposed a hefty 50 per cent tariff on India, the Centre on Thursday extended duty-free import of cotton by three more months till December 31 this year to support the country’s textile exporters who are facing steep tariffs issues from US President Donald Trump. The government’s move is expected to give a big relief to textile manufacturers and consumers alike in lowering input costs across the textile value chain, encompassing yarn, fabric, garments, and made-ups etc.
Earlier, on August 18, the Union finance ministry had allowed duty exemption on cotton imports from August 19 till September 30. The ministry’s move came after the US imposed a 50 per cent duty on Indian goods, including textiles, gems and jewellery, and leather, effective August 27. “In order to support exporters further, the central government has decided to extend the import duty exemption on cotton (HS 5201) from 30th September 2025 till 31st December 2025,” the ministry said.
“This includes exemption from both the 5 per cent basic customs duty (BCD) and the 5 per cent agriculture infrastructure and development cess (AIDC), as well as a 10 per cent social welfare surcharge on both, which led to a cumulative 11 per cent import duty on cotton,” the ministry said in a statement.
The government, however, said that the duty exemption would enhance the availability of raw cotton in the domestic market, stabilise cotton prices, and thereby reduce inflationary pressure on finished textile products. “It would support the export competitiveness of Indian textile products by lowering production costs and protecting small and medium enterprises in the textile sector,” it added.
Experts in the sector feel that the duty exemption until year-end will let Indian textile companies import cheaper cotton. “The move of the government will ease pressure amid a slowdown in US demand. With the duty-free extension, imports could hit a record 4.2 million bales this year. Strong imports are likely to continue into the first quarter of next year as well,” said Atul Ganatra, president of the Cotton Association of India.
