In a bid to provide relief to the country’s textile industry grappling with steep U.S. import duties, the government on Thursday announced an extension of duty-free cotton imports until December 31, 2025.
Earlier this month, on August 18, the Finance Ministry had granted a temporary exemption on cotton imports from August 19 to September 30. With the latest decision, the benefit now runs through the end of the calendar year.
The Ministry of Finance stated: “To provide further support to exporters, the Central Government has extended the exemption on cotton imports (HS 5201) from September 30, 2025, to December 31, 2025.”
The waiver covers the 5% Basic Customs Duty (BCD), the 5% Agriculture Infrastructure and Development Cess (AIDC), and the 10% Social Welfare Surcharge, effectively removing an 11% duty burden on cotton shipments.
Officials expect the measure to ease input costs across the textile value chain—spanning yarn, fabric, garments, and home textiles—thereby offering respite to both manufacturers and consumers.
Tariffs Bite Indian Exporters
The move comes amid mounting pressure on Indian exporters after the United States imposed a 50% duty on key Indian products, including textiles, gems and jewellery, and leather, effective August 27. The Finance Ministry, in a separate report, warned that the secondary and tertiary impacts of these tariffs could challenge the broader economy, with India already witnessing Asia’s sharpest earnings downgrades.
Industry Impact
By enhancing raw cotton availability, the exemption is aimed at stabilising domestic cotton prices, curbing inflationary pressures in the textile sector, and preserving the competitiveness of Indian exports. The government noted that the measure will particularly safeguard Small and Medium Enterprises (SMEs), which form the backbone of India’s textile ecosystem.
Industry analysts say the policy could help exporters partially offset the impact of U.S. trade barriers by keeping production costs in check and ensuring global buyers remain engaged with Indian suppliers.
