India Extends Import Duty Exemption on Cotton until 31 December 2025

Strategic Insights -

The Centre's move to extend the import duty exemption on cotton until 31 December 2025 is set to strengthen India's position in global textile markets, reviving orders for small and medium enterprises as well as export-oriented units. The textile ministry stated that affordable, high-quality cotton is crucial to prevent job losses and encourage industry growth, as the textile-apparel value chain employs over 45 million people. The decision is expected to stabilise input costs, provide relief to manufacturers and consumers, and indirectly benefit farmers by increasing global competitiveness and allowing mills to offer better prices to cotton growers.

Key Takeaways:

  • The Centre's move to extend the import duty exemption on cotton until 31 December 2025 aims to strengthen India's position in global textile markets.
  • The textile ministry stated that affordable, high-quality cotton is crucial to prevent job losses and encourage industry growth, as the textile-apparel value chain employs over 45 million people.
  • Cotton textile exports account for 33% of India's total textile exports, and the textile sector is the country's second-largest employment provider.
  • The decision is expected to stabilise input costs, provide relief to manufacturers and consumers, and indirectly benefit farmers by increasing global competitiveness and allowing mills to offer better prices to cotton growers.
  • The Central Board of Indirect Taxes and Customs notified the decision to extend the duty exemption, which is expected to boost the country's textile exports and sustain employment in the industry.
  • The Minimum Support Price (MSP) mechanism operated by the Cotton Corporation of India Ltd. ensures that farmers receive at least 50% above their cost of production, protecting their interests.
  • With 95% of domestic cotton consumed by the textile industry, the duty exemption is expected to indirectly benefit farmers by allowing mills to offer better prices to cotton growers.

Statistics:

  • 31 December 2025: The new deadline for the import duty exemption on cotton, as announced by the Centre.
  • 45 million: The number of people employed in the textile-apparel value chain in India.
  • 33%: The share of cotton textile exports in India's total textile exports.
  • 95%: The percentage of domestic cotton consumed by the textile industry.
  • 50%: The minimum margin that farmers receive above their cost of production through the Minimum Support Price (MSP) mechanism.

Sources:

  • PTI, as quoted in the article.
  • Central Board of Indirect Taxes and Customs.
  • Ministry of Textiles, Government of India.
  • Cotton Corporation of India Ltd.