The US (US) will emerge as the most important beneficiary of the entire waiver of customs obligation and Agriculture Infrastructure and Improvement Cess (AIDC) on the import of uncooked cotton, which was introduced by the Centre this month, in line with the World Commerce Analysis Initiative (GTRI). “Underneath the India-Australia ECTA, 51,000 MT of such cotton already comes duty-free, however the largest gainer now would be the US, India’s second-largest provider,” the GTRI mentioned in its newest evaluation be aware.
Cotton usually attracts 11 per cent import obligation (5 per cent BCD + 5 per cent AIDC), in place since February 2021.
In accordance with a authorities notification, a whole waiver of obligation on the import of cotton is a short-term measure, solely until December 2025, to assist India’s textile and attire exporters, enhance world competitiveness, and comes with none draw back for Indian farmers.
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Nonetheless, GTRI says direct duty-free imports give speedy entry to world provides, particularly to corporations making high-end clothes utilizing superior fibre.
“The quick duty-free window will ease uncooked materials shortages for yarn and cloth exporters forward of the festive season,” the coverage suppose tank added in its be aware.
On August 19, whereas notifying the transfer, the Ministry of Finance mentioned that the exemption might be relevant to cotton falling below heading 5201 of the Customs Tariff Act, 1975. The waiver will come into impact from August 19, 2025, and stay legitimate until September 30, 2025. Nonetheless, the identical was prolonged until December 31 on August 28, 2025.
The Finance Ministry had mentioned the choice was taken within the public curiosity to ease uncooked materials prices for home producers and exporters at a time when the textile sector has been dealing with worth volatility and provide pressures.
The be aware highlighted that India’s cotton imports have greater than doubled to USD 1.20 billion in FY2025 from USD 579.2 million in FY2024. Main suppliers final yr had been Australia (USD 258.2 million), the U.S. (USD 234.1 million), Brazil ( USD 180.8 million), and Egypt (USD 116.3 million).
Almost 99 per cent of those imports are of longer staple cotton (28 mm and above), which isn’t grown in India in enough amount. GTRI be aware added that this implies the waiver is not going to have an effect on native farmers, who primarily produce medium- and short-staple cotton.
The cotton import waiver has attracted criticism from the political events too, as former Delhi Chief Minister and Aam Aadmi Celebration convenor Arvind Kejriwal on Thursday criticised the Union Authorities, alleging that it has betrayed Indian cotton farmers below strain from US President Donald Trump.
Kejriwal talked about that because of the 11 per cent obligation on US cotton, the cotton of Indian farmers used to promote simply within the Indian market.
