Govt Extends Duty-Free Imports of Cotton by 3 Months Till Dec 31

The government on Thursday extended duty-free import of cotton by three more months till December 31 to support textile exporters facing steep 50 per cent tariffs in the US. Earlier, on August 18, the Finance Ministry had allowed duty exemption on cotton imports from August 19 till September 30.

In a statement on Thursday, the ministry said, "In order to support exporters further, the Central government has decided to extend the import duty exemption on cotton (HS 5201) from 30th September 2025 till 31st December 2025."

This includes exemption from both the 5 per cent Basic Customs Duty (BCD) and the 5 per cent Agriculture Infrastructure and Development Cess (AIDC), as well as a 10 per cent Social Welfare Surcharge on both, which led to a cumulative 11 per cent import duty on cotton.

The move is expected to lower input costs across the textile value chain, encompassing yarn, fabric, garments, and made-ups and provide much-needed relief to manufacturers and consumers alike. Effective August 27, the US has imposed a 50 per cent duty on Indian goods, including textiles, gems and jewellery, and leather.

The duty exemption would enhance the availability of raw cotton in the domestic market, stabilise cotton prices, and thereby reduce inflationary pressure on finished textile products. It would support the export competitiveness of Indian textile products by lowering production costs and protecting Small and Medium Enterprises (SMEs) in the textile sector, according to the government.