US Welcomes India's Decision to Remove Import Duty on Cotton

Strategic Insights -

The US Department of Agriculture has welcomed India's recent decision to remove the 11% import duty on cotton, citing its potential to increase US cotton bookings and provide relief to India's textile and garment industry, which faces challenges from higher U.S. tariffs and rising domestic fiber costs. The duty-free imports are expected to help Indian textile exporters access cheaper, high-quality raw materials, particularly US cotton, which is valued for being contamination free. India's textile and apparel exports to the US are significant, with the country accounting for $6 billion of its cotton-based textile and apparel exports.

Key Takeaways:

  • The US Department of Agriculture has welcomed India's decision to remove the 11% import duty on cotton, citing its potential to increase US cotton bookings and provide relief to India's textile and garment industry.
  • The duty-free imports are expected to help Indian textile exporters access cheaper, high-quality raw materials, particularly US cotton, which is valued for being contamination free.
  • The exemption is temporary, from August 19 to September 30, to align with the start of India's new cotton marketing year from October 1.
  • Competing countries like Bangladesh, Indonesia, Cambodia, and Vietnam benefit from significantly low US tariff rates, putting Indian exporters at a disadvantage.
  • The value of US cotton exports to India rose from $147.13 million in 2020 to $491.20 million in 2022.
  • In the first six months of 2025, US cotton exports to India surged 109% to $181.46 million, from $86.89 million during January-June 2024.
  • The US is India's largest market for cotton-based textile and apparel exports, accounting for $6 billion of its exports.
  • The US Department of Agriculture notes that nearly 95% of imported US cotton is processed and re-exported as textiles and apparel.
  • The removal of duties mirrors a similar exemption in February 2019, when the government removed duties on extra-long staple cotton after industry lobbying.

Statistics:

  • The value of US cotton exports to India rose from $147.13 million in 2020 to $491.20 million in 2022.
  • In the first six months of 2025, US cotton exports to India surged 109% to $181.46 million, from $86.89 million during January-June 2024.
  • India's cotton import duty cuts are expected to benefit the textile industry, which faces challenges from higher U.S. tariffs and rising domestic fiber costs.
  • The US Department of Agriculture notes that the import duty on cotton is currently removed, comprising a 5% basic customs duty, 5% agriculture infrastructure and development cess, and a 1% surcharge on both.

Sources:

  • The Indian Express (P) Ltd. (2025)
  • Contify.com (2025)
  • US Department of Agriculture (2025)