In an effort to ease cost pressures on the textile industry and cool prices, the Center has temporarily lifted the 11% duty on imports of raw cotton until September 30.
Both the 5% basic customs duty and the 5% agriculture infrastructure and development cess are eliminated under this exemption, which went into effect on August 19.
Centre Temporarily Waives 11% Duty on Raw Cotton Imports to Ease Textile Industry Costs
A gazette notification issued late Monday described the waiver as a “necessary” step taken “in public interest.”
According to officials, the action is intended to protect small and medium-sized businesses (SMEs), which are particularly susceptible to price fluctuations, stabilize the price of raw cotton, and lessen inflationary pressures on completed textile products.
Additionally, the government anticipates that this decision will boost the export competitiveness of Indian textiles, which provide a significant source of foreign exchange earnings and employ millions of people.
This respite comes as Indian clothing exports will soon be subject to a 50% tariff in the U.S. market, which combines an existing 25% duty with an additional 25% penalty associated with India’s purchases of Russian oil.
Indian exporters are at a disadvantage because China is subject to a 30% duty, while Bangladesh and Vietnam only pay 20%.
India’s Cotton Imports More Than Double in Last Financial Year
In the most recent fiscal year, India’s imports of cotton more than doubled.
Global Trade Research Initiative (GTRI) data indicates that shipments increased 107% to $1.2 billion from $579 million the previous year.
Due to mills switching to cheaper Brazilian cotton, the U.S. share of India’s cotton imports has decreased from 40–50% to a projected 19% in FY25 since import taxes were implemented in 2022.
Confederation of Indian Textile Industry (CITI) and other industry associations had been urging a waiver, arguing that the high cost of inputs was making it harder to compete with regional rivals.
Ajay Srivastava, founder of GTRI, said, “The waiver will help mills facing high input costs and support yarn and fabric exporters ahead of the festive season. The relief is limited to 40 days to avoid sustained downward pressure on domestic cotton prices, which could hurt farmers.”
