The Central government has announced that raw cotton imports will now be duty-free until September 30, a temporary relief aimed at supporting India’s struggling textile sector.The move is expected to bring down input costs, cool rising prices, and protect small and medium-sized textile businesses that have been hit hard by high raw material expenses.

According to the official notification issued on August 19, the waiver removes both the 5% basic customs duty and the 5% agriculture infrastructure and development cess, which together made cotton imports costlier by 11%. The government said the step was necessary in the public interest, given the current challenges faced by the textile industry and exporters.

Officials explained that the decision is meant to stabilise cotton prices, lower inflationary pressure on finished products like yarn and fabric, and ensure India’s textile sector remains competitive in global markets.The sector is one of the largest employers in the country and contributes significantly to foreign exchange earnings.

The timing of this relief is crucial as Indian exporters are facing fresh headwinds abroad. In the United States, Indian apparel will soon attract a 50% tariff, an existing 25% duty plus another 25% penalty linked to India’s Russian oil imports.This makes Indian products far more expensive compared to competitors such as Bangladesh and Vietnam, which face 20% duty, and China, which faces 30%.

India’s dependence on cotton imports has already increased. A report by the Global Trade Research Initiative (GTRI) showed that imports more than doubled last year, rising from $579 million to $1.2 billion. The share of US cotton in India’s imports has also fallen to around 19% in FY25, while mills are increasingly sourcing cheaper cotton from Brazil.

Industry groups such as the Confederation of Indian Textile Industry (CITI) had been lobbying for this waiver, warning that high input costs were eating into profits and reducing competitiveness. Experts say the temporary relief will benefit mills and exporters ahead of the festive season.

However, the government has limited the exemption period to just 40 days to prevent a sharp drop in domestic cotton prices, which could negatively affect farmers.