If the exemption is extended beyond September, the impact on domestic cotton prices and negative farmer sentiment could amplify.
Published Aug 19, 2025 | 2:06 PM ⚊ Updated Aug 19, 2025 | 3:28 PM
Representational image. (iStock)
Synopsis: By making imported cotton cheaper, the government is easing cost pressures across sectors — from spinning mills to garment manufacturers.
The Union government has announced a temporary removal of 11 percent import duty on raw cotton, effective 19 August to 30 September, 2025.
The order, issued late on Monday, is seen as a breather for India’s bleeding textile industry, which is already in doldrums post Donald Trump’s steep 50 percent tariff against Indian exports to the US.
The finance ministry informed that the exemption covers both the Basic Customs Duty and the Agriculture Infrastructure and Development Cess (AIDC).
The duty waiver is widely seen as a lifeline for textile exporters. By making imported cotton cheaper, the government is easing cost pressures across sectors — from spinning mills to garment manufacturers.
Key benefits:
Lower raw material costs: Mills can access cotton at international prices, narrowing the gap with global competitors.
Competitive edge: India faces tough competition from Bangladesh, Vietnam, and China; cheaper inputs strengthen its export position.
Improved profitability: Textile and garment companies are expected to see healthier margins. Stocks of leading Indian players such as Vardhman Textiles, Welspun Living, and Gokaldas Exports surged following the announcement, according to Reuters.
The Confederation of Indian Textile Industry (CITI) and other trade bodies, which have long pressed for such a measure, welcomed the government’s decision.
While the textile industry cheers, farmers are more cautious. The arrival of duty-free cotton imports could put downward pressure on domestic prices, especially in major cotton-growing states like Gujarat, Maharashtra, and Telangana.
Increased competition: Mills may prefer cheaper foreign cotton, reducing demand for domestic harvests.
Short-term cushion: The exemption runs only until September 30, 2025, limiting the immediate fallout.
Variety difference: A few of the cotton that India imports is of superior quality than what is grown locally. Hence, farmers involved in producing medium-staple cotton may be in for the hard end of the bargain.
A disappointed Hubbali-based farmer Siddu Teji said, “US President Trump has imposed massive tariffs on Indian exports to America. Earlier it was 11 percent tariffs, which has now been raised to 50 percent. Meanwhile, cotton from US is entering India tax-free right under Prime Minister Narendra Modi’s nose. How is this justified? This is not right at all. He (Modi) is buckling under Trump’s pressure. I urge the PM to provide concessions to local cotton farmers instead. We can grow any type of cotton. Therefore, I request the Prime Minister to take back this decision.”
The Union government’s decision reflects a delicate balancing act amidst Trump’s trade war – supporting an export-oriented textile industry hit by US tariffs, while also managing the interests of domestic cotton farmers.
If the measure remains temporary, the textile sector will enjoy short-term relief without inflicting deep damage on farmer incomes. But if the exemption is extended beyond September, the impact on domestic cotton prices and negative farmer sentiment could amplify.
