In a strategic move to support its beleaguered textile industry, the Indian government has extended the exemption of import duties on cotton until December 31, 2025. This decision aims to mitigate the adverse effects of the recent 50% U.S. tariff on Indian goods, which has significantly impacted the country’s textile exports.
The Finance Ministry’s announcement on August 28, 2025, extends the previously granted duty exemption, which was set to expire on September 30. The extension is intended to provide textile manufacturers with a longer window to place cotton import orders, thereby stabilizing raw material costs and ensuring uninterrupted production during the critical festival season.
The U.S. tariff, implemented on August 27, 2025, has been a significant blow to India’s textile sector. The Apparel Export Promotion Council (AEPC) reported that the U.S. market accounts for approximately 33% of India’s garment exports. The sudden imposition of the 50% tariff has led to order cancellations and a slowdown in new orders, particularly affecting exporters in Gujarat, a state that contributes to 30% of India’s textile exports.
In response, the Indian government has also been in discussions with industry bodies to explore alternative markets and strategies to mitigate the impact of the U.S. tariffs. The AEPC has been actively engaging with the Ministry of Commerce & Industry, seeking support measures such as loan repayment relief and financial aid for exporters.
The cotton import duty exemption is part of a broader set of measures aimed at bolstering the textile sector. The government has been working to enhance domestic cotton production through increased Minimum Support Prices (MSP) and improved procurement mechanisms. However, the exemption is expected to have implications for domestic cotton farmers, as it may affect the demand for locally produced cotton during the peak harvesting season.
The extension of the cotton import duty exemption is seen as a temporary relief measure. The government has indicated that it will continue to monitor the situation closely and take further steps as necessary to support the textile industry and ensure its competitiveness in the global market.
