India has waived its cotton import duty until 30 September, a temporary step aimed at easing supply pressures and showing flexibility in trade negotiations. The suspension covers raw cotton under heading 5201 and is expected to benefit American exporters while providing temporary relief for India’s garment industry during its festival demand season ahead.
- The government announcement removes both customs duty and agriculture cess, effectively suspending around 11% levies on imported raw cotton until the end of September.
- Industry observers interpret the waiver as an attempt to reduce bilateral tensions with the US, which recently escalated tariffs on Indian goods in response to oil purchases from Russia.
- Industry associations welcomed the duty suspension, noting it could help align domestic cotton costs with international benchmarks and stabilise textile prices.
- Cotton availability in India has tightened significantly, and the temporary relief is aimed at curbing yarn price increases and easing downstream cost pressures in the garment sector.
THE TRIGGER: India’s suspension of cotton import duties until 30 September was announced against the backdrop of strained trade talks with the US. Announced through a finance ministry notification, the exemption eliminates the 11% levy on raw cotton imports. This step is viewed as an immediate attempt to ease garment sector pressures while signalling flexibility in bilateral negotiations.
- The waiver applies to cotton imports classified under heading 5201 and covers shipments already in transit, providing relief to importers during clearance.
- US suppliers are expected to be the largest beneficiaries, given China’s additional tariffs on American cotton that redirected volumes towards India.
- A scheduled US trade delegation visit to New Delhi in late August was cancelled, leaving uncertainty over the next stage of talks.
- The exemption period has been deliberately kept short, giving the Indian government leverage while managing domestic industry sensitivities around agriculture and trade exposure.
THE BACKDROP: The Committee on Cotton Production and Consumption, chaired by the Textile Commissioner, had a few months ago recommended removing the 11% import duty. Stakeholders at its Mumbai meeting argued that removing or freezing the levy would help stabilise supplies and send a positive signal to Washington. The panel projected tighter domestic output and rising imports, reinforcing calls for urgent relief measures.
- The Tamil Nadu Spinning Mills Association noted that a waiver or freeze on duties could reassure United States trade partners about India’s textile export commitments.
- The Cotton Association of India forecast production this season at 291.30 lakh bales, down from earlier estimates of nearly 300 lakh bales.
- Imports are expected to more than double to 33 lakh bales, up from 15.20 lakh bales in the previous year, according to CAI.
- Total cotton supply, including 25 lakh bales imported by March 31, is pegged at 306.83 lakh bales, against estimated consumption of 315 lakh bales.
WHAT’S AT STAKE: India’s labour-intensive garment and textile sectors face mounting challenges from escalating US tariffs, which risk undermining competitiveness in their largest export market. The temporary cotton duty suspension offers only short-term relief. Exporters continue to grapple with cancelled orders, rising costs, and fears of production relocation abroad, jeopardising ambitions of doubling textile and apparel exports by 2030.
- US tariffs on Indian goods are set to double to 50% later in August, after previously ranging from 0–5%, with some textiles between 9 and 13%.
- Indian exporters warn of lost orders and cancelled contracts, while exploring overseas manufacturing options to remain viable in the US market.
- Tariff escalation coincides with labour shortages and limited capacity, straining the sector’s ability to meet surging festival season garment demand.
- Relocation of production abroad could undermine the government’s ‘Make in India’ manufacturing programme and erode employment across cotton-linked value chains.
WHAT THE DATA SHOWS: India’s cotton imports and production trends illustrate why the duty suspension matters for meeting supply requirements. Imports surged to 2.71 million bales in FY25, up from 1.52 million bales in FY24. The US, Australia, Brazil, and Egypt emerged as key suppliers, providing shipments worth more than $800 million combined in FY25.
- US supplied about $234 million of cotton in FY25, while Australia, Brazil, and Egypt contributed $258 million, $181 million, and $116 million respectively.
- Overall cotton imports rose to $1.2 billion in FY25, doubling from $579 million in FY24, reflecting increased dependence on foreign fibre supplies.
- India’s cotton output fell from 33.7 million bales in FY23 to 32.5 million bales in FY24, and is estimated at 30.7 million bales in FY25, according to agriculture ministry figures.
- According to the US Department of Agriculture, China led global production in 2024/2025 with 32 million bales (26% of world output), while India ranked second with 25 million bales (21%).
