India Suspends Cotton Import Duties to Shield Textile Industry
A Timely Respite for Fabric Makers
In a strategic move, the Indian government has temporarily suspended the 11 per cent import duty on raw cotton—from August 19 to September 30—via a notification issued late on Monday by the Finance Ministry. All imports under the tariff heading 5201, which covers raw cotton, are now exempt from both the basic customs duty and the Agriculture Infrastructure and Development Cess (AIDC).
Industry Welcomes the Move
The waiver has been heralded as a “necessary” public interest measure by government sources.Textile industry bodies, most notably the Confederation of Indian Textile Industry (CITI), had long demanded the removal of cotton import duties to align domestic costs with global market rates. CITI’s Secretary General Chandrima Chatterjee warmly welcomed the government’s decision, although noting that the relief is temporary.
Cushioning Against US Tariff Blow
This relief comes as a crucial buffer for India’s garment exporters, who are grappling with a punitive 50 per cent tariff imposed by the United States—a composition of an existing 25 per cent levy and an additional 25 per cent to come into effect later in August, linked to India’s oil purchases from Russia.By contrast, competing exporters in Bangladesh and Vietnam face tariffs of about 20 per cent, while China’s rate stands at 30 per cent.
Market Response: Stocks Climb Sharply
Markets responded swiftly to the announcement. Textile stocks saw sharp gains, with firms like Vardhman Textiles, Raymond Lifestyle, Indo Count, and Welspun Living rising between 3 per cent and 8 per cent.
The move has been credited with improving investor sentiment across the textile sector.
Boosting “Make in India” Amid Export Uncertainty
India’s garment exporters are already under pressure from a labour crunch, production constraints, and the rising cost of raw materials. Some are reportedly exploring overseas manufacturing options to mitigate the impact of U.S. tariffs—raising concerns over the government’s “Make in India” ambition.The duty waiver is seen as a critical step to stem production shifts abroad and preserve the domestic manufacturing ecosystem.
Looking Ahead: Extension Possible
While the relief is temporary, industry officials remain optimistic that the exemption could be extended beyond September, should global trade tensions persist or domestic demand intensify.
India’s long-term textile export target—to reach $100 billion by 2030—makes such policy support essential.
| Aspect | Details |
|---|---|
| Duty Exemption | 11 per cent raw cotton import duty waived from August 19 to September 30 |
| Policy Scope | Covers both basic customs duty and AIDC |
| Key Supporters | CITI and textile industry groups |
| Trade Context | Countering 50 per cent US tariffs—higher than regional rivals |
| Market Movement | Textile stocks surged up to 8 per cent |
| Strategic Goal | Protect domestic production; support “Make in India”; aim for $100B textile exports by 2030 |
