India's Textile Sector Cheers as Cotton Import Duty Exemption Extended Through Early 2025

In a significant move poised to invigorate its massive textile sector, India has officially extended the import duty exemption on cotton until January 31, 2025. This critical decision, communicated through a notification from the Ministry of Finance, offers a welcome reprieve and a vital competitive edge to the nation's spinners, weavers, and garment manufacturers, who have been navigating a complex landscape of fluctuating raw material costs.

The previous exemption, initially set to expire on October 31, 2024, faced widespread calls for extension from industry stalwarts.

Textile bodies had vigorously lobbied the government, highlighting the persistent challenges posed by elevated domestic cotton prices and, at times, inconsistent supply. This proactive extension ensures that from November 1, 2024, through the close of January 2025, cotton imports will continue to attract zero customs duty, thereby stabilizing input costs and fostering a more predictable operating environment.

The implications of this policy are far-reaching.

By allowing duty-free access to international cotton markets, the government aims to buffer domestic industries against local price surges and ensure a steady supply of high-quality raw material. This directly translates into enhanced competitiveness for Indian textile products on the global stage, enabling manufacturers to price their goods more attractively and capture a larger share of the international market.

For an industry that is a cornerstone of India's economy and a major employer, this stability is paramount.

Industry leaders have been quick to applaud the government's foresight. Associations like the Southern India Mills’ Association (SIMA) and the Apparel Export Promotion Council (AEPC) have vocally welcomed the decision, underscoring its potential to safeguard jobs, promote investments, and boost export earnings.

They view the extension not just as a temporary relief but as a strategic enabler for the sector's sustained growth trajectory, especially as global demand for textiles continues to evolve.

Prior to the initial exemption implemented in April 2022, cotton imports were subject to an 11% duty, comprising 5% Basic Customs Duty (BCD), 5% Agriculture Infrastructure and Development Cess (AIDC), and a 1% social welfare surcharge.

The consistent waiving of this duty underscores the government's commitment to supporting the textile value chain, from farm to fashion. As India strives to position itself as a global textile powerhouse, such policy interventions are instrumental in fortifying the sector against external pressures and unleashing its full potential.