The Central government of India has decided to extend the duty-free import of cotton by three months, moving the deadline from September 30, 2025, to December 31, 2025. The decision was formally announced on Wednesday, 28 August, and is seen as a significant step to provide continued support to exporters and the textile industry during a period of global trade uncertainty.

The announcement, covering cotton imports under HS Code 5201, ensures that importers can continue to source cotton without the burden of import duties, thereby reducing costs and boosting competitiveness in the global market.

Why the extension matters

Cotton is a critical raw material for India’s textile and garment industry, which employs millions of people and contributes significantly to the country’s export earnings. The government’s decision comes at a time when global cotton prices have been volatile, and Indian exporters have been demanding relief to remain competitive.

By extending the exemption, the government aims to:

• Support exporters by keeping input costs lower.

• Stabilise supply chains in the textile and apparel sector.

• Boost India’s global trade competitiveness in the cotton and garments segment.

Background of the exemption

The duty-free cotton import policy was first introduced as part of a relief package for exporters facing high raw material costs. Initially, the exemption was valid up to 30 September 2025, but industry bodies, particularly those representing textile and apparel exporters, requested an extension citing ongoing challenges.

Recognising these demands, the Ministry of Finance confirmed the new deadline as 31 December 2025, giving stakeholders more breathing room.

Impact on the textile industry

The extension of duty-free cotton imports is expected to bring multiple benefits to India’s textile sector, which has faced rising input costs, slowing global demand, and intense international competition.

• Exporters will have lower production costs, helping them secure more international orders.

• Domestic manufacturers can balance local shortages with imports, ensuring uninterrupted production.

• Small and medium-sized enterprises (SMEs) in textiles and garments will get relief from cost pressures, enabling them to sustain operations and employment.

This move is particularly crucial as India is one of the world’s largest producers and exporters of cotton and textiles, and the sector accounts for a substantial share of India’s foreign exchange earnings.

Broader trade context

The extension also comes against the backdrop of global trade uncertainties, including tariff changes, shifting supply chains, and increased competition from countries like Bangladesh, Vietnam, and China. India’s textile sector has been lobbying for sustained government support to navigate these challenges.

The decision aligns with the government’s long-term goal of strengthening India’s export-oriented sectors and enhancing its position in the global textile value chain.

Conclusion

The extension of duty-free cotton imports till December 31, 2025, is a strategic move by the government to provide exporters the cushion they need in uncertain times. While it directly supports exporters, it also indirectly benefits the wider textile and garment ecosystem, including workers, SMEs, and allied industries.

Industry experts believe that such measures, coupled with long-term reforms in the textile value chain, could significantly enhance India’s global standing in cotton exports and apparel manufacturing.

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