This waiver includes the elimination of a 5% Basic Customs Duty (BCD), a 5% Agriculture Infrastructure and Development Cess (AIDC), and a 10% Social Welfare Surcharge, which together constituted an 11% import duty on cotton.
The Central Board of Indirect Taxes and Customs (CBIC) announced this decision with the expectation that it will reduce input costs throughout the textile value chain, including yarn, fabric, garments, and made-ups.
The move is anticipated to provide relief to apparel and textile manufacturers and consumers.
The exemption may be an advantage for US cotton producers and support India's clothing sector, which is bracing for tariffs close to 60% on its US exports starting later this month, according to Reuters.
The textile industry has been advocating for the removal of import duties on cotton due to escalating domestic prices and supply constraints.
The Indian government's decision to waive these duties aims to increase raw cotton availability in the domestic market, stabilise prices to curb inflation on textile products, enhance the export competitiveness of Indian textiles by reducing production costs, and protect small and medium-sized enterprises in the textile sector from price volatility, according to the Ministry of Textiles.
This initiative is projected to positively impact domestic cotton prices and fortify the health of India's textile and apparel sector — a vital source of employment and exports.
Textile associations have expressed their approval of this measure by the government, which exempts all varieties of cotton from an 11% import duty starting 19 August.
Earlier this month (August), US President Donald Trump imposed additional tariffs on Indian products as a response to India's purchase of Russian oil, effectively doubling the total duty to 50% on Indian imports into the US from later this month.
Prior to the tariff increase by Trump in April, Indian exports were subject to duties ranging from 0-5%, with some textile products facing tariffs between 9% and 13%, reported the news agency.
