Import Duty Exemption on Cotton Extended till 31st December 2025
The Government of India has extended the exemption from import duty on cotton until 31st December 2025, with the objective of ensuring stability in raw material supply and strengthening India’s textile sector in the global market. The notification was issued by the Central Board of Indirect Taxes and Customs (CBIC).
This policy decision is aimed at maintaining competitiveness of Indian textiles in international trade while balancing the interests of domestic cotton farmers. Most cotton imports are linked to specialized industrial uses or export commitments and therefore do not substitute domestic cotton production.
Key Benefits of the Extension
- Cost Stabilisation: Duty-free imports will help regulate input costs across the value chain including yarn, fabric, garments, and made-ups, ensuring relief for manufacturers and end-consumers.
- Export Competitiveness: Cotton textiles account for around 33% of India’s total textile and apparel exports, valued at nearly USD 7 billion (Apr–Oct 2024–25). Affordable and high-quality cotton enhances India’s standing in global markets and supports revival of export orders.
- Employment Security: The textile and apparel sector employs over 45 million people. Stable cotton supply is crucial for protecting jobs, boosting production of value-added products, and advancing the goals of Make in India and domestic manufacturing.
- Farmer Safeguards: Farmers’ incomes are protected through the Minimum Support Price (MSP) scheme, operated by the Cotton Corporation of India (CCI), which assures at least 50% returns above cost of production. Imported cotton is generally procured during lean periods or for specialized needs, limiting overlap with peak procurement seasons.
Strategic Importance
The extension reflects the government’s balanced approach of supporting industry growth while safeguarding farmer welfare. By ensuring consistent supply of raw materials, the move is expected to strengthen small and medium enterprises, boost exports, and sustain India’s position as a leading player in the global textile market.
Textile associations have welcomed the decision to exempt all varieties of cotton from the existing 11% import duty and expressed appreciation to the government for addressing a long-pending demand of the industry.
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