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The government has extended the duty-free import of cotton (cotton) by three months. Now textile businessmen will be able to ask for cotton from outside without import duty by 31 December. Earlier, the government gave its exemption from 19 August to 30 September. The decision has been taken to relieve textile traders from the burden of 50% US tariffs.
Today, on Thursday (August 28), the ministry said in a statement, “To support exporters, the central government has decided to increase the import duty exemption on cotton (HS 5201) from 30 September 2025 to 31 December 2025.”
There will be a total discount of 11% in import duty
This includes 5% Basic Custom Duty (BCD) and 5% Agriculture Infrastructure and Development Cess (AIDC) as well as 10% Social Welfare Surcharge, ie exemption from 11% import duty.
The move is expected to reduce the input cost of textile value chains, such as yarn, fabric, garments, and made-ups. This will provide relief to both textile manufacturers and consumers. Since August 27, the US has imposed 50% duty on Indian goods, such as textile, gem-jewelery and leather.
Duty exemption will not reduce raw cotton in the domestic market, cotton prices will be stable and this will reduce inflation pressure on textile products prepared.
According to the government, this step will increase the export competition of Indian textile products, the cost of making products will decrease and small-middle companies (SMES) of this sector will get protection.
50% US tariffs- how much impact on textile
Earlier Status:
In 2024, India had exported a textile of $ 10 billion to the US, ie about 87 thousand crores. This includes readymade garments to cotton yarn and carpet.
India’s total exports increased by 10% to $ 4 billion in the first quarter of this year, with exports to the US 14%.
After the tariff:
The new tariff may increase the price of 50% Indian clothing. Demand for companies is possible by 20–25%. The share of India’s textile exports in the US will decrease from 33% of the previous year to 20-25% this year.
Demand may decrease due to increase in the price of Indian clothing in the US.
What can India do?
- Now Indian textile companies will have to focus on other major export markets like European Union (EU), United Kingdom (UK) and United Arab Emirates (UAE), which is 45% of India’s total exports.
- India’s textile industry has suggested the government to remove import duty of 11% on raw cotton. The move may give a chance to bargain in business talks with the US.
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Read this news related to tariffs …
1. America’s 20% stake in India’s exports
2. 50% US tariffs, notifications released on India from tomorrow
