• Source:JND
Add as a preferred

US Tariffs On India: The Centre on Thursday extended the exemption of import duties on cotton from other countries, including the US, till December 31, 2025, to ensure adequate availability of cotton for the domestic textile industry. The decision came amid uncertainty in several export sectors due to the Trump administration's 50 per cent tariffs on all Indian products. The government had earlier waived the import duties on cotton till September 30.

"To augment availability of cotton for the Indian textile sector, the Central Government had temporarily exempted the import duty on cotton from 19th August 2025 till 30th September 2025. In order to support exporters further, the Central Government has decided to extend the import duty exemption on cotton (HS 5201) from 30th September 2025 till 31st December 2025," the Ministry of Finance said in a statement.

ALSO READ: How India Plans To Reduce US Dependency After Trump’s Tariff Blow, Eyeing 40 Countries For Textile Exports

India is the world's second-biggest cotton producer, and its cotton marketing year runs from October to September. "The duty exemption until year-end will let Indian textile companies import cheaper cotton, easing pressure amid a slowdown in US demand," Atul Ganatra, president of the Cotton Association of India, said as quoted by Reuters.

"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. However, several market watchers said that the exemptions are likely to reduce demand for local cotton, pressuring domestic prices.

Kejriwal Attacks Modi Govt Over Import Duty Exemption:

Attacking the Centre over the decision, AAP National Convenor Arvind Kejriwal accused the Modi government of betraying the farmers of the country and said that the decision has been taken under pressure from the Trump administration. Kejriwal also said that "if Trump is imposing 50 per cent tariffs, India should impose 100 per cent tariffs on America."

"PM Modi has taken some decisions behind our backs which are a huge betrayal of the farmers of the entire country. Recently, under the pressure of Trump and America, it has been decided that the cotton that comes to India from America, till now, there was an 11% duty on it," Kejriwal said.

"In the last few days, the Modi government has decided that the 11% duty that was imposed on the cotton coming from America has been removed. Now, no duty will be imposed on the cotton coming from America. Now, the cotton that will come or has started coming from America, is roughly cheaper in India than the cotton of Indian farmers by an average of Rs 15-20 per kg," the former Delhi CM added.

Kejriwal further demanded the withdrawal of the import duty exemption. "We demand from PM Modi that this order of withdrawing 11% import duty on cotton should be withdrawn with immediate effect and the 11% import duty should be imposed again on cotton coming from America and farmers of our country should be saved," he said.

Industry Leaders Give Mixed Reaction To Import Duty Exemption:

The textile bodies welcomed the waiver of customs duty on cotton imports, stating it would offer immediate relief to manufacturers and exporters grappling with uncertain supplies. Chandrima Chatterjee, Secretary General of CITI, said the decision was a result of persistent appeals from industry representatives.

"It's a great move for the Indian industry, and if that also gives any positive signal to the negotiations, then I think it's a win-win for both sides. But I think the primary trigger has been the repeated concern being raised by the industry bodies and the associations," she stated, as quoted by ANI.

A Delhi-based trader, as quoted by Reuters, said that the earlier import window, ending in September, was too narrow. "Textile mills could not import cotton during that period, as the voyage from exporting countries typically takes more than a month. However, they can now place orders for large quantities for the subsequent period," he said.

ALSO READ: US To Tighten Student And Journalists' Entry? Trump Administration Proposes To Limit Duration Of Visas

Another trader said that the landed cost of imported cotton is nearly 5 per cent to 7 per cent lower than that of local supplies, and the quality is also superior. "Most of the imports will arrive around the December quarter, just when the local crop hits the market. This is likely to push local prices down," the trader said, as quoted by Reuters.

India's Cotton Output Declining

India has witnessed a significant decline in its cotton output, which fell from 33.7 million bales in 2022-23 to 30.7 million bales in 2024-25 amid adverse weather and reduced acreage. The decline has led to a surge in cotton mill owners' dependency on imports, making the country a net importer for the first time in years.

According to a report by Livemint, India imported 2.71 million bales of cotton in FY25, a significant rise from 1.52 million bales in FY24, with the US among the largest suppliers. According to UN COMTRADE data, India imported cotton worth approximately USD 199.16 million from the United States during 2024.

ALSO READ: 'Not About Ukraine At All': Democrats Question Trump's India Tariffs As China Still Buys Discounted Russian Oil

India’s total cotton imports this year surged to around 3 million bales, up from 1.52 million bales in FY 2023–24. While not all of these bales are from the US, exports from America, especially of high-grade ELS cotton, have seen a notable rise, peaking at over 155,000 bales in just a few months early in 2025.