MUMBAI: The government’s decision to eliminate the 11% duty on cotton imports with immediate effect has brought much-needed relief to India’s textile sector, which has been grappling with fear of steep tariff barriers in its largest export market, the US.
The Central Board of Indirect Taxes and Customs (CBIC), through a notification issued on Monday, announced that imports of raw cotton under heading 5201 will be exempted from customs duty between August 19 and September 30. The removal of import duty has been the long pending request from industry bodies, including the Confederation of Indian Textile Industry (CITI), which had sought relief to shield exporters from global trade headwinds.
“The removal of the import duty on cotton, though only for a brief period, signals the government’s strong commitment to help India’s textile sector become stronger and more globally competitive,” said CITI chairman Rakesh Mehra. The measure will help safeguard exporters at a time when several US buyers have either cancelled or deferred orders following Washington’s decision to impose an additional 25% tariff on Indian goods in response to New Delhi’s crude purchases from Russia.
According to CITI, the cotton value chain employs nearly 35 million people and accounts for 80% of India’s textile exports. Disruptions in the sector could have ripple effects on employment and export earnings, with India targeting to double its textile and apparel shipments to $100 billion by 2030. The US is India’s single-largest market for ready-made garments, accounting for 33% of exports in 2024, according to the Apparel Export Promotion Council (AEPC).
Jitin Prasada, minister of state for commerce and industry, told Parliament that the government is pursuing a broader strategy to boost exports through incentives, trade promotion activities, and digital platforms. He said interventions to plug supply-chain gaps have been prepared for 590 districts under the Export Hubs Initiative, with work underway for the remaining districts, to ensure that exporters, particularly MSMEs, are better integrated into global trade.