Cotton Imports Made Duty-Free Till September, Move Seen As Goodwill Gesture To US
Mumbai: In a surprise decision, the Indian government has temporarily removed customs duty and agriculture cess on raw cotton imports. The move is being seen as a step to ease strained trade relations with the United States while also supporting India’s textile industry, which has been facing high cotton prices.
The finance ministry announced that from 19 August to 30 September, cotton imports will not attract any duty. Until now, these imports carried around 11 percent duty. The decision directly helps American exporters, who have been asking for better access to the Indian market.
A signal to the US amid tough trade talks
India and the US have been in a long tussle over trade issues, especially agriculture and dairy. By offering duty-free cotton imports for a short period, New Delhi seems to be showing some flexibility without giving up on its core interests.
However, trade talks remain uncertain. The US team of negotiators cancelled their planned visit to India on 25 August, and no new date has been fixed. At the same time, American tariffs on Indian exports—currently at 25 percent—may rise to 50 percent from 27 August, worsening tensions further.
Trade expert Ajay Srivastava of GTRI called the duty cut “a calibrated gesture” that addresses US concerns while still keeping leverage in India’s hands.
Domestic supply concerns also at play
The move is not just about diplomacy. India’s cotton supply has been shrinking in recent years. Cotton output dropped from 33.7 million bales in 2022-23 to 30.7 million bales in FY25. Imports, on the other hand, have shot up—from 1.46 million bales in FY23 to 2.71 million bales in FY25.
Industry groups had been warning that limited supply could push up yarn prices and raise costs for garment makers. With the festive season approaching, when clothing demand usually rises, the government wants to ensure raw material remains affordable.
US exporters, textile industry welcome step
The US stands to gain the most from India’s decision, especially since China has imposed extra duties on American cotton. Other major cotton suppliers for India include Brazil, Egypt, Australia, and African countries like Benin, Tanzania, and Mali.
Industry bodies in India have also welcomed the relief. CITI (Confederation of Indian Textile Industry) said it had been requesting this cut for a long time to align local cotton prices with global rates.
“Even though the relief is temporary, it will help the industry,” said CITI’s secretary general Chandrima Chatterjee.
Global cotton picture
Globally, China remains the largest producer with 32 million bales, or 26 percent of global output. India is the second largest, producing about 25 million bales, around 21 percent of global production.
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