India extends import duty exemption on cotton until December 31

India extends import duty exemption on cotton until December 31

New Delhi, July 2, 2025 - India has extended an import duty exemption on cotton by three months, until the end of December, according to a government order released on Thursday. This move aims to support the local garment industry, which has been significantly impacted by recent U.S. tariffs.

The exemption, previously set to expire on September 30, now extends to December 31. This decision suspends the 5% basic customs duty, the 5% agriculture infrastructure and development cess, and the 10% social welfare surcharge, resulting in an effective 20% levy on cotton imports [3].

The extension comes amidst the U.S. formally doubling tariffs on Indian exports, raising duties on garments, jewelry, and leather products. The U.S. is India’s largest market for garments, valued at nearly $22 billion in 2024, where India holds a 5.8% market share [1][2]. Major U.S. retailers, including Walmart, Target, Amazon, and H&M, have reportedly requested that Indian suppliers delay shipments, creating uncertainty across the sector.

According to Atul Ganatra, president of the Cotton Association of India, the duty-free extension will allow Indian textile companies to import cheaper cotton, easing pressure amid a slowdown in U.S. demand. "With the duty-free extension, imports could hit a record 4.2 million bales this year. Strong imports are likely to continue into the first quarter of next year as well," Ganatra said [1][2].

The move is expected to enhance raw cotton availability, stabilize prices, and mitigate inflationary pressure on finished textiles, benefiting the entire textile value chain from yarn and fabric to garments [3]. Despite the tariff headwinds, India has set an ambitious target of $100 billion in textile exports by 2030. In the first half of 2024, India’s textile and apparel exports to the US rose 12% to $5.36 billion, ranking third behind Vietnam and China [3].

References:
[1] https://finance.yahoo.com/news/india-extends-cotton-import-duty-040704491.html
[2] https://www.reuters.com/world/india/india-extends-cotton-import-duty-exemption-amid-us-tariff-pressure-2025-08-28/
[3] https://stocktwits.com/news-articles/markets/equity/india-extends-cotton-import-duty-exemption-amid-tariff-pressure/chs6RpfRdmc