SIMA Welcomes Cotton Import Duty Exemption
The industry had long been burdened by the 11% duty introduced in February 2021, which included 5% Basic Customs Duty, 5% Agriculture Infrastructure Development Cess, and a 10% Social Welfare Surcharge. To address raw material shortages, the government earlier provided temporary exemptions between April and October 2022. These measures enabled the sector to capitalize on post-COVID demand, contributing to a business size of USD 172 billion, including USD 45 billion in exports.
While India initially produced 350 lakh bales of cotton against a requirement of 335 lakh bales, a sharp decline in production to 294 lakh bales in 2024 created severe supply challenges. The industry particularly struggled with Extra-Long Staple (ELS) cotton, as domestic output stood at only 5 lakh bales against an annual requirement of 20 lakh bales. In February 2024, the government exempted ELS cotton imports from duty following industry appeals.
Against this backdrop, SIMA consistently urged the government to remove or suspend duties during the off-season (April to September) to balance farmer interests with industry competitiveness.
In a press statement, Dr. S.K. Sundararaman, Chairman, SIMA, thanked the Prime Minister, Union Finance Minister Smt. Nirmala Sitharaman, Union Agriculture Minister Shri Shivraj Singh Chouhan, Union Commerce and Industry Minister Shri Piyush Goyal, and Union Textiles Minister Shri Giriraj Singh for 'favourably considering the long pending demand of the industry and exempting all varieties of cotton from 11% import duty with effect from 19th August 2025.'
Dr. Sundararaman emphasized that exempting cotton during the off-season is crucial for creating a win-win scenario for both farmers and the textile sector, enabling global competitiveness. He further highlighted that the duty exemption, coupled with the landmark UK Free Trade Agreement (FTA), will significantly boost India's textile exports to the UK and other global markets.
He noted that while large exporters could utilize the Advance Authorization Scheme for duty-free imports, the fragmented MSME-driven textile sector requires direct access to imported cotton to meet both domestic and export obligations.
Looking ahead, the SIMA Chief stated that duty exemption until 2030 is essential, as the Rs. 5,900 crore Mission for Cotton Productivity will require 5–7 years to achieve self-sufficiency. He stressed that this move is vital for realizing India's vision of raising textile exports from USD 37 billion to USD 100 billion by 2030.
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