India Extends Duty-Free Cotton Imports Until December 31
The Indian government has extended the exemption on import duties for cotton until December 31, 2025, a move designed to support the domestic textile industry. The decision to waive the 11% cumulative duty for three more months comes as a direct countermeasure to the steep 50% tariffs imposed by the US on Indian exports. The extension aims to enhance the availability of raw cotton, stabilize domestic prices, and help Indian textile exporters maintain their competitiveness in global markets.
Unpacked:
The US imposed 50% tariffs on Indian textile exports as part of broader trade protection measures, aiming to address trade imbalances and support domestic industries. These tariffs came amid ongoing trade tensions between the two countries, affecting garments, jewelry, and leather products exported from India to the US.
The exemption could increase competition for Indian cotton farmers, as cheaper imported cotton may lower domestic prices. However, the government has also raised the Minimum Support Price (MSP) for cotton recently to help protect farmers' incomes amid declining production and global market pressures.
India’s textile sector is crucial, providing direct employment to nearly 35 million people and accounting for about 80% of the country’s total textile exports. The sector is a major contributor to India’s GDP and aims to more than double exports to $100 billion by 2030.
Countries like the US, Brazil, and Australia benefit as India can now source cotton more cheaply from these major producers. US cotton, in particular, may see a price premium in the Indian market due to increased demand from Indian textile manufacturers.