On 19 August 2025, the Government of India announced a temporary waiver of cotton import duty from 19 August to 30 September 2025. The move eliminates the 11% duty on cotton imports and aims to provide much-needed relief to India’s textile and garment industry, which is struggling under steep 50% U.S. tariffs on exports.

Background tariffs and Trade Pressure

The Confederation of Indian Textile Industry (CITI) raised concerns over mounting trade barriers:

• The U.S. imposed a 25% base tariff plus a 25% surcharge, raising costs sharply.

• Competing nations like Bangladesh (20%), Vietnam (20%), and China (30%) face lower duties, making Indian exports less competitive.

• Labor shortages and capacity constraints have further weakened India’s textile momentum, challenging the Make in India initiative.

Details of the Policy Change

Duration

• Effective 19 August – 30 September 2025 (extension under review).

Duty Shift

• The 11% import duty on cotton has been fully waived during this period.

Expected Outcome

• Reduced input costs for textile and garment manufacturers.

• Protection of export competitiveness despite steep U.S. tariffs.

Policy Intent

• Safeguard employment across the textile value chain.

• Maintain India’s share in the global garment export market.

Strategic Implications

Short-Term Relief

The waiver provides immediate breathing space for exporters, keeping factories running while trade negotiations progress.

Export Competitiveness

Without this measure, India risked losing production to East Asia, where supply chains are cost-efficient and government policies more favorable.

Policy Messaging

This decision reinforces the government’s commitment to industrial resilience amid global trade uncertainties.

Expert Reaction

Industry leaders applauded the decision as both timely and necessary. However, some economists cautioned that temporary relief must be complemented by long-term trade solutions, such as:

• Bilateral negotiations with key markets.

• Preferential trade agreements to reduce tariff exposure.

Conclusion

The cotton import duty waiver is a swift policy intervention aimed at stabilizing India’s textile and garment sector. As the September 30 deadline approaches, attention will focus on whether the government pursues extended relief or a broader diplomatic trade strategy to ensure sustainable growth for India’s exporters.