The Finance Ministry on Monday notified the elimination of 11 per cent responsibility on cotton imports with instant impact amid widespread fears of job losses within the textile sector resulting from steep 50 per cent US tariffs that would go away Indian merchandise uncompetitive within the US market, India’s largest export market.
The federal government mentioned that the elimination of import responsibility on cotton in addition to Agriculture Infrastructure and Growth Cess (AIDC) “is critical within the public curiosity” and that notification will come “into pressure with impact from August 19, and shall stay in pressure as much as and inclusive of September 30”.
The textile sector is predicted to be hardest hit sector resulting from steep US tariffs as US is a key marketplace for Indian Prepared-Made Clothes (RMG) exports; its share in India’s complete garment exports in 2024 stood at 33 per cent, as per the Attire Export Promotion Council (AEPC).
“CITI has lengthy been requesting that the import responsibility on cotton be eliminated to assist home cotton costs align with worldwide costs. We, due to this fact, significantly welcome this measure taken by the authorities although the aid is just obtainable briefly,” Confederation of Indian Textile Business (CITI) secretary basic Chandrima Chatterjee mentioned.
As per AEPC, high three most exported merchandise by India to US: cotton T-shirts (9.71 per cent); ladies’s or ladies’ clothes of cotton (6.52 per cent); infants’ clothes of cotton (5.46 per cent), and so on. “The highest three exports of India to the US maintain 10, 36, and 20 per cent share, respectively, within the US complete imports of those merchandise globally,” the export promotion council mentioned.
Notably, residence textiles and carpets are additionally important export-oriented sectors, with exports accounting for 70-75 per cent and 65-70 per cent of complete gross sales, respectively, for these sectors. Of this, the US accounts for 60 per cent of exports for residence textiles and 50 per cent of exports for carpets.
US President Donald Trump had introduced a 25 per cent reciprocal tariff on Indian items on July 30. So as to add to the ache of labour-intensive sectors, Trump has introduced one other 25 per cent tariffs on India. The extra US tariffs are set to come back into impact on August 27.
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Amid steep US tariffs, CITI had requested authorities’s intervention for simpler availability of uncooked supplies, CITI identified that the US tariff fee for India has been set at 50 per cent and that the brand new US fee competing international locations equivalent to Bangladesh is 20 per cent, Indonesia and Cambodia are 19 per cent every and Vietnam is 20 per cent.
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