Relief for Textile Sector: Cotton Import Duty Exemption Extended by 3 Months
Cotton Import: The government has extended the duty-free import of cotton by three months to December 31, 2025.
The government on Thursday extended by three months the duty-free import of cotton up to December 31 to assist textile exporters who are burdened with a substantial duty of 50 per cent in the US. The Finance Ministry had previously provided duty exemption on cotton imports between August 19 and September 30, earlier on August 18.
In a statement on Thursday, the ministry said, "To provide further assistance to exporters, the central government has decided to extend the import duty exemption on cotton (HS 5201) from September 30, 2025 to December 31, 2025." The exemption includes five per cent basic customs duty (BCD) and five per cent agriculture infrastructure and development cess (AIDC) as well as 10 per cent social welfare surcharge on both. Thus, the total import duty on cotton now stands at 11 per cent.
This move is expected to reduce input costs across the entire textile value chain including yarn, fabric, apparel and made-ups and provide necessary relief to both manufacturers and consumers. The US has imposed 50 per cent duty (effective from August 27) on Indian goods including textiles, gems and jewellery and leather.
The duty exemption will increase the availability of raw cotton in the domestic market. Cotton prices will be stable. Apart from this, inflationary pressure on finished textile products will also be reduced. According to the government, this will boost the export competitiveness of Indian textile products by reducing the cost of production and protecting small and medium enterprises (SMEs) in the textile sector.
