In a decisive move to safeguard its domestic textiles and garment industry, the Indian government has eliminated the 11% import duty on cotton (HS code 5201) effective immediately. The Finance Ministry announced that this duty removal will take effect from August 19, allowing cheaper cotton imports to help offset the impact of elevated U.S. tariffs. This India cotton import duty removal due to US tariffs is anticipated to provide relief to local producers facing heightened competition.
The government underscored that abolishing the Basic Customs Duty (BCD) and Agriculture Infrastructure and Development Cess (AIDC) on cotton is a measure taken in the public interest. However, this duty-free status will only be valid for a limited period, expiring on September 30, which marks the end of the current marketing season.
This decision comes amid rising concerns about potential job losses within the textile sector due to a staggering 50% U.S. tariff on Indian exports, making them less competitive in the U.S. market—the country’s largest export destination. Following an initial 25% reciprocal duty imposed on August 7, an additional 25% tariff is set to take effect on August 27.
Industry stakeholders believe that while the removal of the import duty presents a windfall benefit for cotton already in transit, it may not significantly address the immediate needs due to the time-consuming logistics of acquiring cotton bales, which typically takes 40 to 50 days. India predominantly imports cotton from the U.S., Brazil, and West African nations.
Chandrima Chatterjee, Secretary General of the Confederation of Indian Textile Industry (CITI), stated, “CITI has long been requesting that the import duty on cotton be removed to help domestic cotton prices align with international prices. We, therefore, greatly welcome this measure taken by the authorities, even though the relief is only available temporarily.”
According to the Apparel Export Promotion Council (AEPC), the textile sector is likely to face severe challenges due to the steep U.S. tariffs, as the U.S. accounted for around 33% of India’s total ready-made garment exports in 2024. Amid these tariff increases, CITI has urged the government to facilitate easier access to raw materials, noting that India’s tariff rate is significantly higher than competing nations like Bangladesh and Vietnam, which have duty rates of 20% and 19%, respectively, for Indonesia and Cambodia. This India cotton import duty removal due to US tariffs is seen as a vital step to support the textile industry during this challenging period.
