New Delhi, August 19, 2025 – In a significant move to stabilize domestic cotton prices and strengthen the textile sector, the Government of India has announced a complete exemption of customs duties on raw cotton imports, effective from August 19, 2025, until September 30, 2025. This decision, formalized by the Central Board of Indirect Taxes and Customs (CBIC), eliminates the 5% Basic Customs Duty (BCD), the 5% Agriculture Infrastructure and Development Cess (AIDC), and the 10% Social Welfare Surcharge, which together constituted an 11% import duty on raw cotton. The exemption is poised to reduce input costs across the textile value chain, encompassing yarn, fabric, garments, and made-ups, delivering substantial relief to manufacturers and consumers alike.
The textile industry, a cornerstone of India’s economy, has long advocated for the removal of import duties on cotton due to escalating domestic prices and supply constraints. By waiving these duties, the government aims to enhance the availability of raw cotton in the domestic market, thereby addressing supply shortages that have strained the industry. This measure is expected to stabilize cotton prices, mitigating inflationary pressures on finished textile products and ensuring affordability for consumers. Furthermore, the duty exemption is designed to bolster the export competitiveness of Indian textile products by lowering production costs, enabling manufacturers to compete more effectively in global markets.
The decision holds particular significance for small and medium enterprises (SMEs) within the textile sector, which are often more vulnerable to price volatility. By reducing input costs, the government’s initiative provides critical support to these businesses, helping them maintain operational stability and contribute to the sector’s overall growth. The textile and apparel industry, a vital source of employment and export revenue for India, stands to benefit significantly from this policy, which is expected to have a positive impact on its long-term sustainability and economic contributions.
Textile associations across the country have warmly welcomed the government’s decision to exempt all varieties of cotton from the 11% import duty. In statements issued following the announcement, industry leaders expressed gratitude to Hon’ble Prime Minister Shri Narendra Modi and Hon’ble Union Minister of Textiles Shri Giriraj Singh for addressing the sector’s long-standing demand. The move has been hailed as a timely and impactful step toward supporting the textile industry’s growth and resilience.
This temporary exemption, effective immediately and extending through September 30, 2025, underscores the government’s commitment to fostering a robust and competitive textile sector. By addressing the immediate challenges of high input costs and supply constraints, the policy sets the stage for sustained growth in one of India’s most vital industries, ensuring benefits for manufacturers, exporters, and consumers alike.
