India has temporarily scrapped import duty on cotton to ease pressure on its garment industry, facing steep U.S. tariffs and rising costs
New Delhi
India has suspended import duties on cotton from August 19 to September 30, offering temporary relief to the garment industry, which has been struggling with high U.S. tariffs. The decision, announced in a government order on Monday, came after repeated appeals from industry associations, including the Confederation of Indian Textile Industry (CITI), which argued that eliminating the duty would enhance competitiveness.
Until now, cotton imports attracted an 11% duty. Industry leaders believe this exemption could help offset challenges posed by steep U.S. tariffs on Indian garment shipments, which currently stand at 50%—a combination of an existing 25% levy and an additional 25% set to apply later this month. These penalties, linked to India’s imports of Russian oil, place Indian exporters at a disadvantage compared to rivals in Bangladesh (20%), Vietnam (20%), and China (30%).
The relief, though temporary, is expected to ease input costs for manufacturers already grappling with labour shortages and capacity constraints. Industry stakeholders are hopeful that the government may extend the duty-free window beyond September to provide sustained support.
Reports suggest some exporters are considering shifting part of their production overseas to counter the impact of tariffs, a move that could undermine India’s Make in India initiative. The garment sector, vital to the country’s export ambitions, is targeting $100 billion in textile exports by 2030.
The timing is crucial, as India has been positioning itself as a strong alternative for U.S. buyers diversifying away from China and facing instability in Bangladesh. The exemption signals the government’s intent to keep Indian textiles competitive on the global stage, even as long-term policy adjustments may be needed to strengthen the sector.
