The Central Government on Monday extended the exemption of import duty on cotton (HS 5201) till December 31, 2025, a move aimed at ensuring raw material availability for the textile sector and cushioning exporters from global trade headwinds.
The decision to extend the exemption comes amid the 50% US tariffs coming into effect on Wednesday. Indian apparel exports would be the worst hit with effective duty of 64%.
The government had earlier waived the 11% import duty on raw cotton between August 19 and September 30, 2025. The latest decision pushes the duty-free window by three more months.
“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 Rakesh Mehra, chairman of the Confederation of Indian Textile Industry (CITI).
Industry bodies, including CITI, had long demanded the removal of import duty to shield exporters struggling with volatile cotton prices and shrinking overseas demand. The textile industry, which employs about 35 million people in the cotton value chain and contributes nearly 80% of India’s textile exports, has been under pressure after the US imposed an additional 25% tariff on Indian goods earlier this month.
Exporters fear that disruptions could derail India’s ambitious target of doubling textile and apparel shipments to $100 billion by 2030. The US remains India’s largest market for ready-made garments, accounting for around one-third of exports in 2024, according to the Apparel Export Promotion Council (AEPC).
The Central Board of Indirect Taxes and Customs (CBIC) formally notified the extension, providing much-needed relief to the sector as it braces for uncertainty in global trade.