The federal government on Monday agreed to a long-standing demand of the textile business to get rid of the 11 per cent obligation on cotton imports, in a bid to melt the impression of excessive US tariffs on the labour-intensive sector, which is anticipated to take the toughest hit from the 50 per cent US levy.
Nevertheless, the calibrated aid measure to get rid of the obligation till September 30 might additionally assist ease commerce tensions with the US, as Washington is the second-largest cotton exporter to India and has been pushing for broader entry to the Indian market throughout negotiations for a commerce deal.
The Indian Categorical had reported on August 7 that the business had advised an obligation reduce on US cotton as one of many measures to sweeten the commerce deal. Notably, Bangladesh had supplied an analogous concession to the US to enter into an settlement.
Whereas the elimination of obligation is basically geared toward addressing the challenges confronted by the business — starting from steep US tariffs to excessive cotton costs — it additionally acts as a sign to US negotiators that India might be prepared to barter imports of cotton from Washington, an business government stated.
New Delhi-based assume tank World Commerce Analysis Initiative (GTRI) stated that the majority of India’s $1.20 billion cotton imports in FY2025 have been of staple size 28 mm or above and that below the India-Australia Financial Cooperation and Commerce Settlement, 51,000 MT of such cotton already enters duty-free. This implies the largest winner from India’s new duty-free window would be the US, GTRI stated.
Import obligation reduce gained’t impression recent orders
Business executives stated the obligation reduce, a step that had been resisted for years, was introduced through the off-peak season in order that it doesn’t impression Indian farmers, as plucking of cotton begins from October and is offloaded available in the market by March. The interval between October and March is called the height season.
Whereas welcoming the aid, exporters stated that the import of uncooked cotton would solely have an effect on in-transit shipments, for the reason that interval of aid is simply too brief to affect recent orders. Looking for an extension, exporters argued that the measure might assist India to retain different markets such because the UK and EU, however not the US.
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An evaluation by the Confederation of Indian Textile Business (CITI) stated US textile and attire imports have begun surging from international locations equivalent to Vietnam and Bangladesh.
“In June 2025, the US’ 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 robust momentum in sourcing from these international locations,” CITI stated.
India, after a promising efficiency within the first quarter of 2025, witnessed a notable slowdown in T&A exports to the US. In June 2025, India’s exports grew by solely 3.3 per cent in comparison with June 2024 — a lot decrease than its earlier progress trajectory and considerably under opponents equivalent to Vietnam and Bangladesh, CITI stated.
In the meantime, China continued to see a pointy decline in June 2025, with US imports from China dropping by 41 per cent in comparison with June 2024 — extending the downward pattern noticed since April 2025, the business physique stated.
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India’s textile sector is dominated by cotton. The cotton worth chain supplies direct employment to just about 35 million folks and contributes round 80 per cent to India’s whole textile exports. India goals to greater than double textile and attire exports to $100 billion by 2030.