In relief to textile industry, cotton import duty paused
The government has removed the 11 per cent import duty on cotton till September 30th this year, a move that could help the domestic textiles sector in dealing with the challenges posed by the steep tariffs imposed by the US.
The US is the largest market for Indian textiles and garments exporters. The steep hike in tariff of 50 per cent has made the Indian exporters uncompetitive with other origins such as Bangladesh and Vietnam.
Trade bodies such as the Confederation of Indian Textile Industry (CITI) and the Cotton Association of India (CAI) have been demanding the government to scrap the import duty. CITI feels the removal of import duty on cotton will greatly benefit the Indian textile sector to become more efficient and competitive vis-à-vis its international peers.
“The removal of the import duty on cotton, though only for a brief period, signals the government’s strong commitment to help India’s textile sector become stronger and more globally competitive,” said CITI Chairman, Rakesh Mehra.
The Central Board of Indirect Taxes and Customs (CBIC), through a notification issued on August 18, has removed the customs duty and agriculture infrastructure and development cess (AIDC) levied on import of all varieties of cotton with effect from August 19 till September 30, 2025.
According to CITI, the duty exemption also covers cotton in transit, as the taxable event for determining the rate of duty is the date of filing of the Bill of Entry, after the goods have entered the Indian port. In cases where the Bill of Entry has been filed in advance (as permitted by Customs for faster clearance prior to the arrival of goods), the same can be withdrawn and re-filed afresh at the earliest, that is, before the Out-of-Charge Order is issued for the imported cotton, CITI said in a statement.
Prices under pressure
Following the duty exemption, domestic cotton prices are seen coming under pressure. On Tuesday, the State-run Cotton Corporation of India (CCI), currently the largest stockholder of the fibre crop in the country, reduced the floor price for various varieties offered through e-auction by ₹600 per candy (of 356 kg each).
“There will be pressure on cotton prices due to the duty removal. Also, the upcoming crop for the year 2025-26 starting October looks good. Resellers are selling ₹300-500 less than the CCI price list,” said Ramanuj Das Boob, Vice-President of All India Cotton Brokers Association and a sourcing agent in Raichur.
Meanwhile, the sales of CCI were impacted on Tuesday following the removal of duty. CCI could sell around 3,800 bales (of 170 kg each) on Tuesday compared to Monday’s sales of 6,200 bales.
Record imports
Indian cotton prices are 10-12 per cent higher than global rates. Taking advantage of cheaper overseas supplies, domestic mills and traders have imported about 33 lakh bales till July 31. Another 6 lakh bales are expected by September-end, pushing imports to a record 39 lakh bales, said Atul Ganatra, President of the Cotton Association of India. India imported 15.2 lakh bales in 2023-24.
The harvest in Brazil has started in the middle of August and some Bangladesh mills have contracted at 73 cents per pound, roughly translating to about ₹50,500 per candy, while the Indian prices are hovering around ₹56,000-57,000 levels.
Besides the lower global prices, the textiles sector prefers the imported cotton as it is contamination-free. Previously, India’s cotton imports had touched a high of 31 lakh bales during 2022-23, when the domestic prices had soared touching a record ₹1 lakh per candy.
“In the last 10 days alone, 1.5 lakh bales has been contracted for the October-November-December delivery,” Ganatra said.
Per the Commerce Ministry quick estimates, imports of cotton raw and waste registered a 61 per cent increase during the April-July period in dollar value terms. Cotton imports stood at $383.22 million during April-July this fiscal — up from $238.30 million in the same period last year. During April-March 2024-25, India’s imports of cotton raw and waste touched $1.219 billion — an increase of 104 per cent over previous year’s $598.66 million.
Published on August 19, 2025
