Government suspends import duty on cotton

The Ministry of Finance has removed the 11% import duty on cotton till September 30.

In a notification issued on August 18, the Ministry said the Customs Duty will not be levied from August 19 to September 30 (including September 30) on cotton imports.

According to Nishant Asher, secretary of the Indian Cotton Federation, India imported 39 lakh bales of cotton in the 2024-2025 cotton season (October to September). Nearly two lakh bales of cotton are expected to be in transit now and these will benefit from the removal of the import duty. The Government should extend the import duty exemption for cotton booked till September 30, he said.

The Global Trade Research Initiative said cotton imports surged 107.4%, rising from $579.2 million in FY 24 to $1.20 billion in FY 25. Major suppliers last year included Australia ($ 258.2 million), the US ($ 234.1 million), Brazil ($ 180.8 million), and Egypt ($ 116.3 million).

Since February 2021, imports were subject to 11% duty (5% Basic Customs Duty and 5% Agriculture Infrastructure & Development Cess). The waiver is expected to help mills face high input costs and support yarn and fabric exporters struggling with competitiveness. The measure is a time-bound stopgap to stabilise markets before the new crop arrives.

The Cotton Textiles Export Promotion Council chairman Vijay Agarwal said the Government should consider institutionalising a regular policy framework to permit duty-free imports of cotton during July to October every year, coinciding with the southern hemisphere crop arrivals. This will enable textile mills to plan procurement well in advance and maintain India’s competitiveness in the global market.