India has decided to extend its import duty exemption on cotton until December 31, 2025, providing much-needed relief to the domestic textile and garment industry. The exemption, earlier set to expire in September, was considered too short for meaningful imports since shipments from major exporting nations generally take over a month to arrive. With this new extension, mills will now have more time to secure supplies from surplus cotton-producing countries such as Australia, Brazil, the United States, and African exporters. This move comes at a time when the Indian textile sector is grappling with slowing global demand and rising trade pressures.
The decision is already impacting markets, with global cotton prices edging higher soon after the announcement. However, experts believe the cheaper imports will likely put downward pressure on domestic cotton prices as mills increasingly turn to foreign supplies, which are 5–7% cheaper and often superior in quality compared to local produce. Traders anticipate that this overlap between incoming imports and the arrival of the Indian harvest in the December quarter could drag local prices down further.
For Indian mills, however, the extension is a major relief. The earlier September deadline was too tight to arrange significant shipments, leaving textile companies struggling to source affordable raw material. The fresh extension now gives them ample time to place larger orders and stabilize production costs. The Cotton Association of India has already projected that imports could climb to a record 4.2 million bales this year, with robust demand likely to extend into early 2025.
Adding to the industry’s troubles are heightened tariffs from the United States, India’s largest market for garments and jewellery, which recently doubled duties on Indian exports to as high as 50%. With global demand under strain and overseas buyers reducing orders, the availability of cheaper cotton imports is expected to help exporters remain competitive in international markets despite these headwinds.
While India is the world’s second-largest cotton producer, the combination of better quality and lower landed costs of imported cotton means that foreign supplies will continue playing a crucial role in sustaining the textile industry in the coming months. The policy shift not only cushions mills against rising costs but also signals the government’s intent to shield a sector that contributes significantly to both employment and exports.
