India suspends cotton import duties till Sept 30 amid Trump tariffs pressure

The Government of India has suspended the 11% import duty on raw cotton from August 19 to September 30. A notification issued by the Ministry of Finance through the Central Board of Indirect Taxes and Customs (CBIC) stated that all imports under heading 5201, covering raw cotton, will remain exempt from customs duties during this period.

The decision follows demands from industry groups such as the Confederation of Indian Textile Industry (CITI), which had urged the government to remove the duty to help the textile and garment sector remain competitive. The exemption is expected to ease input costs for manufacturers at a time when exports are facing additional trade barriers.

The United States has imposed a 50% tariff on Indian garment exports, consisting of an existing 25% levy and an additional 25% penalty scheduled to take effect later this month. The additional tariff was announced as a response to India’s continued import of Russian oil. India has described the move as “unfair, unjustified and unreasonable,” reiterating that its energy imports are based on market conditions and are essential for ensuring the energy security of 1.4 billion people.

The stock market reflected the announcement on Tuesday, with shares of textile companies including Vardhman Textiles, Raymond Lifestyle, Indo Count, and Welspun Living rising between 3% and 8%. Industry representatives have said they expect the government may consider extending the exemption beyond September to safeguard export competitiveness against countries such as Bangladesh, Vietnam, and China, which face lower tariff rates.

India’s garment sector is also contending with labour shortages and limited production capacity. Reports indicate that some exporters are exploring overseas manufacturing to mitigate the impact of higher tariffs. The country has set a target to raise textile exports to $100 billion by 2030, with the latest trade measures and external tariffs emerging as critical factors for the sector’s outlook.