18 Sept 2025
In a move aimed at safeguarding the textile sector from external shocks, the Ministry of Finance has announced the elimination of the 11% import duty on cotton, including the Agriculture Infrastructure and Development Cess (AIDC), with immediate effect. The exemption, notified on August 19, will remain in force until September 30, 2025.
The decision comes amid mounting concerns over the impact of steep 50% U.S. tariffs on Indian textile and garment exports — a development that could erode India’s competitiveness in its largest export market.
Industry stakeholders have welcomed the measure. Chandrima Chatterjee, Secretary General, Confederation of Indian Textile Industry (CITI), said:
“CITI has long been requesting that the import duty on cotton be removed to help domestic prices align with international levels. We greatly welcome this step, even though the relief is only temporary.”
According to the Apparel Export Promotion Council (AEPC), India’s total garment exports to the U.S. accounted for 33% in 2024. The top three product categories — cotton T-shirts (9.71%), women’s or girls’ cotton dresses (6.52%), and babies’ cotton garments (5.46%) — together hold a significant share in U.S. imports.
In addition, home textiles and carpets are among India’s key export-oriented sectors, with exports to the U.S. accounting for nearly 60% of home textiles and 50% of carpets. These sectors derive 70–75% and 65–70% of their total sales, respectively, from exports.
The U.S. has recently doubled down on trade restrictions, imposing a 25% reciprocal tariff on Indian goods on July 30, followed by an additional 25% levy announced for implementation on August 27. Together, the measures have raised India’s tariff exposure in the U.S. to 50%, a level significantly higher than those applied to competitors such as Bangladesh (20%), Indonesia (19%), Cambodia (19%), and Vietnam (20%).
With trade headwinds intensifying, industry bodies have urged the government to ensure the uninterrupted availability of raw materials and extend policy support to cushion exporters from the fallout of rising U.S. protectionism.