Govt scraps duty on cotton imports till Sept 30 amid US tariffs pressure
The government said that the elimination of import duty on cotton as well as Agriculture Infrastructure and Development Cess (AIDC) 'is necessary in the public interest' and that notification will come 'into force with effect from August 19, and shall remain in force up to and inclusive of September 30'.
The textile sector is expected to be hardest hit sector due to steep US tariffs as US is a key market for Indian Ready-Made Garments (RMG) exports; its share in India's total garment exports in 2024 stood at 33 per cent, as per the Apparel Export Promotion Council (AEPC).
'CITI has long been requesting that the import duty on cotton be removed to help domestic cotton prices align with international prices. We, therefore, greatly welcome this measure taken by the authorities even though the relief is only available temporarily,' Confederation of Indian Textile Industry (CITI) secretary general Chandrima Chatterjee said.
As per AEPC, top three most exported products by India to US: cotton T-shirts (9.71 per cent); women's or girls' dresses of cotton (6.52 per cent); babies' garments of cotton (5.46 per cent), etc. 'The top three exports of India to the US hold 10, 36, and 20 per cent share, respectively, in the US total imports of these products globally,' the export promotion council said.
Notably, home textiles and carpets are also significant export-oriented sectors, with exports accounting for 70-75 per cent and 65-70 per cent of total sales, respectively, for these sectors. Of this, the US accounts for 60 per cent of exports for home textiles and 50 per cent of exports for carpets.
US President Donald Trump had announced a 25 per cent reciprocal tariff on Indian goods on July 30. To add to the pain of labour-intensive sectors, Trump has announced another 25 per cent tariffs on India. The additional US tariffs are set to come into effect on August 27.
Amid steep US tariffs, CITI had asked government's intervention for easier availability of raw materials, CITI pointed out that the US tariff rate for India has been set at 50 per cent and that the new US rate competing countries such as Bangladesh is 20 per cent, Indonesia and Cambodia are 19 per cent each and Vietnam is 20 per cent.
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