Government Extends Duty-Free Cotton Import to Bolster Textile Exports Amid US Tariff Hikes

The government extends duty-free cotton imports till December to aid textile exporters facing 50% US tariffs. The policy aims to reduce production costs, stabilize cotton prices, and support SMEs by exempting cotton from duty, thus enhancing export competitiveness amid rising US tariffs.

The government, on Thursday, announced a three-month extension on duty-free cotton imports till December 31 to assist textile exporters tackling a substantial 50% tariff imposed by the US.

Initially, the Finance Ministry had granted this exemption from August 19 to September 30, aiming to ease the impact on the textile industry. On Thursday, it confirmed the extension, which eliminates the 5% Basic Customs Duty (BCD), the 5% Agriculture Infrastructure and Development Cess (AIDC), and a 10% Social Welfare Surcharge, cumulatively reducing the import duty on cotton by 11%.

This policy shift is anticipated to decrease costs along the textile production chain, benefiting yarn, fabric, garments, and made-ups, in addition to creating a more stable domestic cotton market and reducing inflationary pressures on finished products.

(With inputs from agencies.)