USDA welcomes govt decision to remove import duty on cotton

The Finance Ministry, on August 18, had issued a notification doing away with the 11% tariff on cotton imports, comprising a 5% basic customs duty, 5% agriculture infrastructure and development cess and a 1% surcharge on both.

The exemption is temporary, from August 19 to September 30, to align with start of India’s new cotton marketing year from October 1.

But the USDA statement said that it would still “help Indian textile exporters access cheaper, high-quality raw materials, particularly US cotton, which is valued for being contamination free”. Competing countries like Bangladesh, Indonesia, Cambodia and Vietnam “benefit from significantly low US tariff rates, putting Indian exporters at a disadvantage,” it noted.

The value of US cotton exports to India rose from $147.13 million in 2020 to $211.32 million in 2021 and $491.20 million in 2022, before falling to $223.69 million and $209 million in the following two calendar years. The first six months of 2025, however, has seen exports surge 109% to $181.46 million, from $86.89 million during January-June 2024.

According to the USDA, nearly 95% of imported US cotton is processed and re-exported as textiles and apparel. And the US happens to be India’s largest market, accounting for $6 billion of its cotton-based textile and apparel exports.

It remains to be seen whether the Modi government will extend the duty-free imports measure beyond September 30. The USDA believes that the heavy rain in central and southern India may delay harvesting of the new crop. That, along with the government’s higher minimum support price, is likely to raise domestic fiber costs.

The current import tariff abolition “mirrors a similar exemption in February 2019, when the government removed duties on extra-long staple cotton after [Indian textile] industry lobbying,” the statement added.

Harish Damodaran is National Rural Affairs & Agriculture Editor of The Indian Express. A journalist with over 33 years of experience in agri-business and macroeconomic policy reporting and analysis, he has previously worked with the Press Trust of India (1991-94) and The Hindu Business Line (1994-2014).     ... Read More

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