Trump Tariffs on India: The Government of India has extended the deadline for duty-free import of cotton by three months to provide relief to textile exporters. Now, companies will be able to import cotton without paying any import duty till December 31, 2025. Earlier, its deadline was till September 30. The Finance Ministry has taken this decision in view of the difficulties of the textile industry.
America increased the tariff
The US has increased the import duty on many products coming from India to 50 percent from August 27, including clothes and garments. India exports textiles and garments to the US on a large scale, but this tariff hike has dealt a big blow to the industry.
According to think tank GTRI, India’s textile exports to the US in 2024-25 were around $10.8 billion, of which about half was garments. Now the import duty on these has increased from 13.9 percent to 63.9 percent. This has caused losses to factories in major textile hubs of India like Tirupur, Noida, Surat, Gurugram, Ludhiana, and Jaipur, and production has stopped at many places.
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Companies are turning to other countries
At the same time, due to rising US duties, some Indian companies are now considering sending supplies to the US from countries like Bangladesh, Indonesia, Vietnam, and Guatemala. Some companies are also looking for opportunities in Ethiopia and Kenya, where the import duty is only 10%.
Relief will be provided by cheap raw materials
According to GTRI, India imported cotton worth about $120 million in 2024-25, which is double compared to last year. Australia, America, Brazil, and Egypt are India’s major cotton suppliers. Due to the free trade agreement with Australia, already 51,000 tonnes of cotton is coming duty-free from there. With the latest decision of the government, now cheap cotton can be imported from countries like America, which will reduce the input cost and help the textile industry to compete in the global market.
Earlier, an 11 percent duty was levied
Till now, a total import duty of up to 11 percent has been levied on cotton, which included basic customs duty of 5 percent, agriculture cess of 5 percent, and social welfare surcharge of 10 percent. With the new decision of the government, this duty will no longer be levied, which will provide relief to the yarn, fabric, and garment industry.
Raw material will be available before the festive season
Let us tell you that after the increase in tariff, now exporters will not have to go through the advance scheme or refund process for duty-free imports. This will ensure the immediate availability of raw materials before the festivals, and their working capital will also not get stuck. This will also help those companies that make expensive garments of better quality.
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A matter of concern for farmers
However, some people believe that the duty-free import of cotton can harm Indian farmers, because the cotton crop comes to the market between November and February. If imports are cheap at that time, farmers will not get the right price for their crop.
According to expert Ajay Srivastava, 99% of imports are of long-fiber cotton, the production of which is very low in India. Indian farmers mainly grow short and medium-fiber cotton, so their chances of loss are low. This step has been taken only to provide short-term relief.
India’s production decreased, and imports increased
Let us tell you that at one tim,e the production of cotton in India had reached 390 lakh bales per year. Now it has come down to 290 lakh bales. For this reason, the country has to depend on imports.