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Government of India Extends Import Duty Exemption on Cotton until December 2025

Strategic Insights

— 2 min read

The Indian government has taken steps to support the country's textile industry by extending the import duty exemption on cotton until 31st December 2025. This move aims to stabilize raw material costs, strengthen the country's global competitiveness in the textile-apparel value chain, and sustain employment in the industry. The decision is expected to benefit domestic cotton farmers, as well as manufacturers and consumers, by ensuring consistent raw material supply and promoting the production of higher-value fabrics and garments.

Key Takeaways:

  • The Government of India has extended the import duty exemption on cotton until 31st December 2025 to stabilize raw material costs and strengthen the country's global competitiveness in the textile-apparel value chain.
  • The duty exemption is expected to benefit domestic cotton farmers indirectly, as global competitiveness enables mills to pay better prices to cotton farmers.
  • Cotton textile exports account for 33% of India's total textile and apparel exports, valued at USD 7.08 billion, making it the second-largest contributor after readymade garments.
  • The textile-apparel value chain employs over 45 million people, and stable cotton supply is crucial to prevent job losses and encourage industry growth.
  • Imported cotton often caters to specialized industrial requirements and does not substitute domestic cotton, with most imports occurring during lean periods or when domestic stocks are insufficient.
  • The government monitors cotton prices closely and retains the flexibility to impose safeguards as and when required.
  • The Cotton Corporation of India Ltd. (CCI) operates the Minimum Support Price (MSP) mechanism, which ensures that farmers receive at least 50% above their cost of production.
  • Most textile associations have welcomed the government's move to exempt all varieties of cotton from the 11% import duty up to 31st December 2025 and expressed gratitude to Prime Minister Shri Narendra Modi and Union Minister Shri Giriraj Singh for addressing the long-standing demand of the industry.

Statistics:

  • Cotton textile exports accounted for approximately 33% of India's total textile and apparel exports during April-October 2024-25.
  • The value of cotton textile exports during this period was USD 7.08 billion.
  • The textile-apparel value chain employs over 45 million people in India.
  • Imported cotton often accounts for only a small percentage of domestic cotton consumption, with the majority of imports occurring during lean periods or when domestic stocks are insufficient.
  • The CCI operates the MSP mechanism, which ensures that farmers receive at least 50% above their cost of production.

Sources:

  • Government of India (2025, August 28)
  • PIB Delhi (2025, August 28)

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