Centre extends import duty relief on cotton till December 31,aids SMEs

The Centre has extended the import duty exemption on cotton until December 31, 2025, in a move aimed at easing pressure on the domestic textile industry grappling with fresh U.S. tariffs. A government order issued on Thursday confirmed the extension of duty-free imports by three more months.The exemption, which was earlier set to expire on September 30, includes relief from the 5% Basic Customs Duty (BCD), 5% Agriculture Infrastructure and Development Cess (AIDC), and the 10% Social Welfare Surcharge on both, cumulatively amounting to an 11% import levy on cotton.
According to officials, the decision would lower input costs across the textile value chain—covering yarn, fabric, garments, and made-ups—while offering much-needed respite to manufacturers and consumers. By stabilising cotton prices in the domestic market, the government expects the move to help contain inflationary pressures on finished textile products.The policy shift comes just days after the U.S. imposed a steep 50% tariff on Indian exports, including textiles, gems and jewellery, and leather, effective August 27. The government said that continued duty-free cotton imports would safeguard the export competitiveness of Indian textile products by reducing production costs and shielding Small and Medium Enterprises (SMEs) in the sector.
Earlier this month, on August 18, the Finance Ministry had granted exemption on cotton imports from August 19 to September 30. The fresh extension until December 31 is being viewed as both a relief measure for domestic stakeholders and a signal to Washington that New Delhi is willing to address U.S. concerns on agricultural tariffs.Industry representatives welcomed the move, saying that uninterrupted cotton availability would help exporters maintain orders in key global markets at a time of heightened trade tensions.

(Business Correspondent)