Duty-free cotton imports extended till end of the year
On August 19, the Centre suspended customs duties totalling 11% on imports of the raw fibre for a limited period from August 19 to September 30. The tax break will now continue till December 31
The Centre has extended an exemption on cotton-import duties until the end of the year in a move aimed at making the domestic apparel sector more competitive, especially in the context of the US’s 50% tariff on Indian exports.
On August 19, the Centre suspended customs duties totalling 11% on imports of the raw fibre for a limited period from August 19 to September 30. The tax break will now continue till December 31, a finance ministry statement said.
Srijit Misri, a member of the Apparel Export Promotion Council, hailed the decision, saying, “Council chairman Sudhir Sekhri had recently written a letter to Prime Minister Narendra Modi requesting a policy initiative to save the sector and livelihoods due to the adverse business environment and the US tariffs. We welcome this move.”
N Thirukumaran, general secretary, Tiruppur Exporters Association (TEA) and chairman of Esstee Exports India Pvt Ltd, said the exemption “would stabilise the cotton prices in India to be at par with international prices”.
“The extension has come as a timely relief for the textile industry, which was severely impacted by the sudden imposition of an abnormal 50% tariff by the US on Indian goods,” the Southern India Mills’ Association (SIMA) said in a statement.
When the waiver was announced on August 19, the government said in an official statement that the temporary import tax holiday was being granted following “persistent demands from the textile industry”, which was battling supply constraints.
Farmers’ groups have criticised the move, saying cheaper imports of the fibre will hurt them in a year of good rains and an expected robust harvest.
By temporarily halting the levies, the government aims to stabilise inflation in products, such as finished garments, ease a raw-material crisis and protect small and medium enterprises, the August 19 official statement said.
India imports substantial quantities of cotton, mostly from the US and Australia, despite being the world’s second largest producer at 25 million bales (170 kg each), as domestic prices have been consistently higher than global rates.
India’s imports of cotton in 2024-25 had risen to 2.71 million bales against 1.52 million bales in FY24 and 1.46 million bales in the year before that.
“The government has to balance the interests of all stakeholders. The duty-free period is temporary and import contracted are being monitored,” a person aware of the development told HT earlier this week.
Farmer organisations have alleged that the pace of inbound shipments have quickened too fast in view of the exemption.
The Samyukt Kisan Morcha (SKM), the farmers’ body that spearheaded the 2020 agitation against three repealed farm laws, said at a press meet Monday that the US offered massive subsidies to its cotton growers, allowing the country to sell cheap. It demanded a roll-back of the exemption and has threatened to launch an agitation.
The cotton sector provides employment to over 30 million people and 50 million farmers, according to the government’s Economic Survey 2023. India aims to ramp up apparel exports to $100 billion by 2030.
In 2023-24, India exported $34.4 billion worth of textiles and apparel, including handicrafts, according to official figures. The United States and the European Union accounted for nearly 47% of total shipments.
