Govt extends duty-free cotton  import till Dec amid US tariffs

The government on Thursday announced an extension of the import duty exemption on cotton until December 31 to support the local industry which has been hit by the steep 50 per cent US tariffs. This follows the initial waiver of 11 per cent import duty introduced on August 19, which was set to expire on September 30.

"...In order to support exporters further, the Central government has decided to extend the import duty exemption on cotton (HS 5201) from September 30 till December 31," the Ministry of Finance said in a statement.

The decision aims to enhance the availability of cotton for the garment industry, officials said. The Indian textile sector employs millions and accounts for a significant share of exports. By extending the duty-free import window, the government seeks to support exporters facing global competition and rising input costs. The exemption is expected to ensure a steady supply of raw cotton and stabilise domestic prices.

Fraud with farmers

This is nothing but a deep fraud with our farmers...the decision will result in losses to cotton farmers as they would not get appropriate price for the crop because of the waived off duty. The cotton from the US will remain 15-20% cheaper than Indian produce.

Arvind Kejriwal, AAP national convener 

On August 19, the government announced removal of 11 per cent import duty on raw cotton, effective immediately, till September 30 to support the domestic textile industry. The objective was to ease the financial burden on mills and garment manufacturers, who have been grappling with high domestic cotton prices and limited availability.

The Global Trade Research Initiative Founder Ajay Srivastava said the US would be the largest beneficiary of the duty removal. "Cotton imports have surged 107.4 per cent, rising from $579.2 million in FY2024 to $1.20 billion in FY2025. Major suppliers last year included Australia ($258.2 million), the US ($234.1 million), Brazil ($180.8 million), and Egypt ($116.3 million). The biggest winner from India’s new duty-free window, however, will be the US — the second-largest supplier after Australia," Srivastava had said.

K Selvaraju, Secretary General of the Southern India Mills' Association, said the association had been asking the government for the last two years to remove duty on cotton imports. ”There is a shortage of cotton supply in the country. We wanted cotton at zero duty so that our industries do not lose competitiveness at international markets," he said.