India extends duty-free cotton imports until December 31
The government extended duty-free imports to support the Indian textile industry, particularly exporters who are facing a steep 50% tariff imposed by the US.
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REUTERS
India on Thursday extended the duty-free import of cotton for three more until December 31, 2025, from September 30. The Indian government’s decision will ease the burden of the Indian textile industry, particularly mills in the south, which are under pressure due to the 50 per cent tariffs imposed by the US government. It will help Indian textiles and garments to be competitive in markets such as the United Kingdom (UK) and the European Union with who it has signed trade deals.
This decision will likely result in cotton imports during the first three months of the marketing year 2025-26, starting in October, doubling to around 20 lakh bales of 170 kg each. This is the second time the Goverment has come to the rescue of the textiles industry in 10 days. On August 19, the government had exempted the 11 per cent duty on cotton imports till September end.
Atul Ganatra, President, Cotton Association of India (CAI), said the extension of duty exemption will provide relief to Indian textile mills, especially those in the South. They can now get access to cheaper cotton from countries like Brazil, the US, Africa and Australia. “It will give a lifeline to the mills in South,” Ganatra said, adding that CAI had recently urged the government to extend the duty-free imports for a few more months.
Global prices ruling lower
International prices are currently lower by about 20 per cent compared with Indian domestic prices. Cotton futures on the InterContinental Exchange (ICE), New York, are hovering at 67-68 cents per pound, equivalent to ₹46,000 per candy of 356 kg in the Indian rupee, while domestic prices are hovering around ₹55,000 per candy, Ganatra said.
For the current marketing year 2024-25 ending September, imports are expected to be between 40 and 42 lakh bales. “During the October-December, we believe 15-20 lakh bales will arrive, compared with 10 lakh bales in the corresponding period last year,” Ganatra said.
ICE futures are under pressure due to a bigger crop in Brazil, which is 7 per cent higher at 235 lakh bales, while their domestic consumption is only 30 lakh bales, he said. As Brazilian cotton is cheap, no one is buying US cotton. China, the biggest buyer, has not been buying US cotton over the past six months due to the tariff war. It has levied a 30 per cent tariff on US cotton. India’s cotton imports from Brazil have seen a 10-fold increase during the current 2024-25 season to over 6.5 lakh bales valued at over ₹1,620 crore till the end of May.
Ganatra said the Indian textile exports are linked to the yarn prices, which are linked to the ICE Futures. That is very important and in eight of the past 10 years, Indian mills had access to cheaper domestic cotton, he said.
Indian cotton was cheaper than ICE Futures, but only over the past couple of years, it has become costlier due to the increase in MSP and increase in prices by the Cotton Corporation of India, he said. Though mills were able to manage over the past two years, the tariff is hurting the industry badly, he said.
A trade analyst said the duty-free imports will help Indian textile exporters to take on competitors such as Vietnam, Bangladesh and Pakistan in the UK and European markets. “The duty-free facility will give them relief,” he said, adding that it will also aid Indian textile and garment exporters to further their advantage they gained after the unrest in Bangladesh.
Ganatra said the US decision will, however, provide an opportunity to look at over 200 other countries.
(With inputs from Subramani Ra Mancombu, Chennai)
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Published on August 28, 2025
