US tariffs: Duty-free cotton to boost exports; 'make Indian textiles more competitive' says ministry

The Centre’s move to extend the import duty exemption on cotton until 31 December 2025 is set to strengthen India’s position in global textile markets, reviving orders for small and medium enterprises as well as export-oriented units, the government said.

The announcement comes at a critical time, as Indian textile exporters are worried abou the impact of 50% tariffs imposed by the US on IndUS imposes steep 50% tariffs on Indian goods, with America being the largest export destination for the country’s textile and apparel industry.


"Affordable, high-quality cotton strengthens India's position in export markets, reviving orders for small and medium enterprises as well as export-oriented units. The textile-apparel value chain employs over 45 million people, and stable cotton supply is crucial to prevent job losses and encourage industry growth," the textile ministry said on Thursday.

The ministry added that extending the import duty waiver on cotton until December is a strategic intervention "bound to help make Indian textiles more competitive in the international market while safeguarding the interests of domestic cotton farmers," PTI reported.

Most duty-free imports cater to specialised industrial requirements or brand-linked export contracts and do not replace domestic cotton. By stabilising raw material costs, the move is expected to enhance global competitiveness and sustain employment in the textile-apparel value chain.

Cotton textile exports account for 33% of India’s total textile exports. The textile sector, the country’s second-largest employment provider, relies on stable access to high-quality cotton.

The decision, notified by the Central Board of Indirect Taxes and Customs, is expected to stabilise input costs across the textile value chain, including yarn, fabric, garments, and made-ups, providing relief to both manufacturers and consumers, the ministry said, as cited by PTI.

Farmers’ interests are protected through the Minimum Support Price (MSP) mechanism operated by the Cotton Corporation of India Ltd. (CCI), which ensures that farmers receive at least 50% above their cost of production. The government will keep a close watch on cotton prices and can implement safeguards whenever necessary.

With 95% of domestic cotton consumed by the textile industry, the duty exemption is expected to indirectly benefit farmers, as increased global competitiveness allows mills to offer better prices to cotton growers.