A day after steep 50 per cent US tariffs got here into impact that has raised issues of job losses within the textile business, the Finance Ministry on Thursday prolonged the exemption on cotton import responsibility until December 31, a transfer that might assist the Indian textile business place long-term cotton import orders. The transfer comes after producers flagged that the responsibility exemption given until September 30 was too brief a window to put recent orders and would solely assist in-transit shipments.
“To enhance the supply of cotton for the Indian textile sector, the Central Authorities had quickly exempted the import responsibility on cotton from 19 August 2025 until 30 September 2025. With the intention to help exporters additional, the Central Authorities has determined to increase the import responsibility exemption on cotton (HS 5201) from 30 September 2025 until 31 December 2025,” the Ministry of Finance mentioned in an announcement.
The import responsibility exemption on cotton has been a long-standing demand of the Indian business, however the authorities has maintained an 11 per cent responsibility largely to guard small cotton farmers. Notably, cotton was among the many 4 objects that noticed the sharpest enhance in Minimal Assist Worth (MSP) by the federal government in Might this yr as cotton manufacturing has been declining over time.
Nonetheless, the exemption prolonged until December 31 would affect farmers as plucking of cotton begins from October and is offloaded out there by March. The interval between October and March is called the height season. Whereas the elimination of responsibility is essentially aimed toward addressing the challenges confronted by the business—starting from steep US tariffs to excessive cotton costs—it may additionally act as a sign to US negotiators that India could also be keen to barter imports of cotton from Washington, an business government mentioned.
In a letter to the Prime Minister Narendra Modi, Attire Export Promotion Council (AEPC) chairman, Sudhir Sekhri, on Wednesday mentioned that the current tariff hike by the US, doubling the duties on the export of attire and different items to 50 p.c, is certainly a “enormous problem for merchandise exporters”.
“Nonetheless, we’re of the agency perception that India’s principled and measured stand will finally profit our nation’s financial pursuits in the long run. Your authorities’s dedication to safeguarding the nation’s progress and self-reliance is commendable. Our business is already experiencing the results of the tariff hike, with potential losses and order cancellations. We’re exploring alternate markets and methods to mitigate the affect of the US tariffs. We’re additionally in lively discussions with the Ministry of Commerce & Business and have been assured of their very best help,” the letter learn.
New Delhi-based suppose tank International Commerce Analysis Initiative (GTRI) mentioned that the majority of India’s $1.20 billion cotton imports in FY2025 had been of staple size 28 mm or above, and that underneath the India–Australia ECTA, 51,000 MT of such cotton already enters duty-free. This implies the most important winner from India’s new duty-free window would be the US, GTRI mentioned.
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An evaluation by the Confederation of Indian Textile Business (CITI) mentioned that US textile and attire imports have begun surging from nations corresponding to Vietnam and Bangladesh. “In June 2025, the USA’s textile and attire (T&A) imports from Vietnam and Bangladesh surged considerably by 26.2 per cent and 44.6 per cent, respectively, over June 2024, reflecting sturdy momentum in sourcing from these nations,” CITI mentioned.
India, after a promising efficiency within the first quarter of 2025, witnessed a notable slowdown in T&A exports to the USA. In June 2025, India’s exports grew by solely 3.3 per cent in comparison with June 2024—a lot decrease than its earlier development trajectory and considerably beneath opponents corresponding to Vietnam and Bangladesh, CITI mentioned.
In the meantime, China continued to see a pointy decline in June 2025, with imports from China dropping by 41 per cent in comparison with June 2024—extending the downward pattern noticed since April 2025, the business physique mentioned.
India’s textile sector is dominated by cotton. The cotton worth chain offers direct employment to almost 35 million folks and contributes round 80 per cent to India’s complete textile exports. India goals to greater than double textile and attire exports to $100 billion by 2030.
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