India Extends Duty-Free Cotton Imports to Ease Tariff Impact on Textile Exporters

In a move aimed at protecting India’s textile exporters and sustainable fabric suppliers from mounting U.S. tariffs, the Indian government has extended its duty-free cotton import policy until December 31, 2025. The decision is expected to lower input costs across the value chain — from yarn to garments — and enhance global competitiveness for Indian exporters.

Relief for Exporters and Sustainable Fabric Suppliers

The updated exemption covers previously applicable levies including:

• 5% Basic Customs Duty (BCD)
• 5% Agriculture Infrastructure and Development Cess (AIDC)
• 10% Social Welfare Surcharge

Combined, these levies had previously added up to an 11% import duty on cotton (HS 5201).

According to the Ministry of Finance, the exemption — initially set to expire on September 30 — has now been extended by three more months to support the textile sector amid global disruptions. “The move comes in response to the 50% import tariffs imposed by the U.S. on Indian textile goods,” a government spokesperson noted.

These tariffs have impacted over $12 billion worth of textile exports from India to the U.S., which makes up roughly a third of the country’s annual $35 billion garment export total.”

The decision also aims to stabilize raw cotton supply in the domestic market, ease price pressures on finished textile goods, and support MSMEs.

At present, approximately 25% of India’s cloth production is exported. With domestic cotton prices under pressure and mills seeking cheaper sources from abroad, the duty exemption also helps streamline sourcing for fabric producers under open licenses.

As global cotton prices react to these shifts, this extension may offer temporary relief not just to Indian exporters and sustainable fabric suppliers — but also to procurement teams across the U.S., EU, and other high-demand markets looking to hedge against input cost volatility.

Attribution:

Source: This article is a summarized adaptation of content originally published by The Times of India on August 28, 2025. Read the original story here.