New Delhi, Aug 19: The Union Government has removed the 11% import duty on cotton till September 30, 2025, giving relief to the domestic textile industry grappling with high raw material costs and global tariff challenges.
The Ministry of Finance issued an extraordinary notification on the duty waiver, effective August 19.
Industry Reaction
“This is a welcome step. The Government has accepted our demand and removed the 11 per cent import duty on cotton upto September 30,” said Atul Ganatra, President, Cotton Association of India (CAI).
However, Ganatra said clarity is needed on whether the exemption applies to import contracts signed before September 30 or to shipments arriving at Indian ports by then.
- If contracts are valid till Sept 30, new deals are expected as Brazil’s harvest has begun, potentially pushing imports up by 10–15 lakh bales, he added.
Import Trends
- As of July 31, India had already imported 33 lakh bales (170 kg each).
- Another 6 lakh bales are expected by end-September, taking total imports to a record 39 lakh bales.
- This is sharply higher than:
- 15.2 lakh bales in 2023-24, and
- 31 lakh bales in 2022-23 (when domestic prices touched ₹1 lakh per candy).
In the last 10 days alone, contracts for 1.5 lakh bales have been signed for October–December delivery.
Price Gap Driving Imports
- Global cotton prices: ~73 cents/lb (≈ ₹50,500 per candy).
- Indian cotton prices: ₹56,000–57,000 per candy.
- Indian cotton is 10–12% costlier than global supplies, making imports attractive.
Trade Value Surge
- April–July 2024-25: Cotton imports at \$383.22 million, up 61% YoY.
- FY 2024-25 (Apr–Mar): Imports reached \$1.219 billion, up 104% from \$598.66 million in the previous year.
Domestic Outlook
- 2024-25 pressing estimates: 311.4 lakh bales, down from 336.45 lakh bales last year.
- Domestic demand: 314 lakh bales, slightly higher than 313 lakh bales last year.
- Closing stocks: Projected at 57.59 lakh bales, higher than last year’s 39.19 lakh bales.
✅ This move is expected to cool raw material costs for Indian spinners and mills, while helping them remain competitive against global rivals like Bangladesh, which is already contracting Brazilian cotton at lower rates.
