India Suspends 11% Cotton Import Duty Till Sept 30 to Ease Garment Industry, Signal to U.S
New Delhi, Aug 19, 2025 — The Indian government has suspended the 11% import duty on cotton until September 30, a move aimed at cutting input costs for exporters and signaling openness to the United States amid ongoing tariff tensions. The decision, announced late Monday, is expected to lower raw material prices for apparel makers who have been reeling from steep U.S. duties on Indian goods taking effect later this month
New Delhi, Aug 19, 2025 — The Indian government has suspended the 11% import duty on cotton until September 30, a move aimed at cutting input costs for exporters and signaling openness to the United States amid ongoing tariff tensions. The decision, announced late Monday, is expected to lower raw material prices for apparel makers who have been reeling from steep U.S. duties on Indian goods taking effect later this month
Why this matters
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Cheaper inputs for factories: Duty-free imports should immediately reduce costs for mills and garment exporters, helping them stay competitive against Bangladesh and Vietnam. Reuters
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Geopolitical signal: New Delhi’s step is widely read as a goodwill gesture to Washington after the U.S. announced an additional 25% tariff on Indian goods—doubling total duties to 50%—linked to India’s purchases of Russian oil. Reuters
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Possible extension: Industry bodies expect the waiver could be extended beyond September if headwinds persist. Reuters
The backdrop
A planned late-August visit by U.S. trade negotiators to New Delhi was called off, delaying talks on a bilateral trade deal and any relief from the new U.S. tariffs due from Aug 27. Indian exporters had already started exploring manufacturing overseas to cushion the blow. Reuters
Who benefits & by how much
Trade analysts say the U.S. stands to gain most as a top supplier of cotton to India; within 2024/25, India imported $234 million worth from the U.S., alongside shipments from Australia, Brazil and Egypt. Overall cotton imports more than doubled to $1.2 billion year-over-year. Reuters
Spillover to markets
On Tuesday, the rupee climbed to its highest level this month, buoyed by fading risks of additional U.S. tariffs and optimism around planned domestic tax cuts—sentiment that also dovetails with the cotton-duty suspension. Reuters
What’s next
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Competitiveness watch: The move helps India’s apparel sector defend orders against regional rivals while U.S. duties remain elevated. Reuters
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Policy path: With labour shortages and capacity constraints still biting, industry groups like CITI may push for a longer duty-free window if demand and order flows don’t normalize quickly. Reuters
