India Extends Import Duty Exemption On Cotton Till December As US Tariffs Kick-In

The government on Thursday extended the import duty exemption on cotton from September to December to aid the domestic textile sector hit hard by high US tariffs.

"To augment availability of cotton for the Indian textile sector, the Central Government had temporarily exempted the import duty on cotton from 19 August 2025 till 30 September, 2025. In order to support exporters further, the Central Government has decided to extend the import duty exemption on cotton (HS 5201) from 30^th September 2025 till 31^st December 2025," the Ministry of Finance said in a statement.

The decision comes as Indian exporters face additional tariff headwinds in their key US market. The Trump administration began charging an additional 25% tariff on Indian goods for buying Russian oil from Aug. 27, on top of the 25% base rate imposed on Aug. 7. Sectors such as pharma, energy products and electronic goods are out of the ambit of these sweeping duties.

Industry representatives had flagged that elevated cotton prices, coupled with duty structures, were eroding competitiveness in labour-intensive sectors such as apparel and home textiles.

By removing the duty temporarily, the government aims to stabilize cotton prices, thereby reducing inflationary pressure on finished textile products, support export competitiveness of Indian textile products by lowering production costs and protect small and medium enterprises (SMEs) in the textile sector, which are more vulnerable to price fluctuations.