The Finance Ministry has scrapped the 11% import duty and Agriculture Infrastructure and Development Cess (AIDC) on cotton with immediate effect, a move aimed at easing pressure on India’s textile sector as steep US tariffs threaten exports and jobs. The notification, issued on Monday, will remain in force from August 19 until September 30.
The measure comes as Indian ready-made garment (RMG) exporters brace for a 50% tariff in the US—India’s largest garment export market, accounting for 33% of total exports in 2024. The Apparel Export Promotion Council (AEPC) noted that cotton T-shirts (9.7% share), women’s cotton dresses (6.5%), and babies’ cotton garments (5.5%) are India’s top exports to the US, holding significant shares in US global imports. Home textiles and carpets, with over 60% of their exports going to the US, are also expected to be hit hard.
Industry body CITI welcomed the duty waiver, saying it would align domestic cotton prices with global levels, though it stressed the relief was temporary. The US announced a 25% reciprocal tariff on Indian goods on July 30, followed by an additional 25% levy effective August 27, doubling the tariff rate on Indian exports to 50%. Competing exporters, including Bangladesh (20%), Indonesia (19%), Cambodia (19%), and Vietnam (20%), face far lower US duties, raising concerns over India’s competitiveness.
