Earlier, the government had exempted the import duty on cotton from 19th August 2025 till 30th September, 2025. “In order to support exporters further, the Central Government has decided to extend the import duty exemption on cotton from September 30 till December 31, 2025,” according to an official statement.
An import duty of 11% was imposed on cotton in February, 2021, when the country’s production was 35 million bales (170/kg a bale) against a requirement of 33.5 million bales.
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India’s cotton output has declined from about 33.7 million bales (of 170 kg each) in the crop year 2022-23 to an estimated 30.7 million bales in 2024-25, forcing mills to step up imports.
Strategic move to offset trade headwind
The Confederation of Indian Textile Industry (CITI) stated that import duty exemption on cotton will provide ‘much-needed’ support to the Indian textile and apparel sector currently grappling with the 50% US tariff imposed on Indian goods.
The removal of import duty on cotton has been a long-pending request of the textile industry. A CITI analysis has shown that between 2015-16 and 2024-25, cotton imports have on an average only met 5.8% of the total cotton demand.
Stating that extention of duty free import as ‘timely relief’ the Southern India Mills Association (SIMI) allayed any apprehension that exemption comes during the beginning of cotton season might impact cotton farmers.
“The 11% duty was imposed on cotton at a time when India was exporting around 3 – 5 million bales annually while currently cotton production has fallen below 29.5 million bales against the industry’s requirement of about 31.8 million bales, leading to lowest closing stock in history,” according to a SIMI statement.
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Addressing a critical supply-demand gap
The US is the biggest market for the country’s textile and apparel exports, accounting for almost 28% of the total global sales. Cotton imports have surged 107.4% on year in 2024-2025 to $ 1.2 billion.
Major suppliers last year included Australia ($258.2 million), the United States ($234.1 million), Brazil ($180.8 million), and Egypt ($116.3 million).
Almost all (99%) the $1.20 billion cotton imported in FY2025 is of fibre staple length of 28 mm or above.
The stock prices of the major textile companies – Arvind, Raymond and Trident – in BSE had mixed movement on Thursday compared to previous day.
The share of Arvind rose marginally by 0.55% to Rs 284 on Thursday compared to previous day while shares of Raymond and Trident declined by 2.2% and 1% to Rs 606 and Rs 27 respectively.
Under India-Australia ECTA, India already allows duty free import of 51000 tonne cotton of fibre staple length of 28 mm or above.
Industry associations had been warning that tight supplies could push up yarn and garment costs, threatening export competitiveness.
With over 35 million people dependent on the cotton value chain and textiles accounting for about 80% of India’s textile exports, the government aims that the duty relief will put a curb on rise in raw material prices.