The US Department of Agriculture (USDA) has welcomed the Prime Minister Narendra Modi government’s decision to suspend 11% import duty on cotton. According to the statement by the USDA, duty-free imports are expected to increase bookings of US cotton.
Moreover, the statement cited that suspending 11% import duty on cotton will also provide relief to India’s textile and apparel industry, which is struggling with high US tariffs in the US and rising costs of domestic fibre.
Notably, the Finance Ministry had issued a notification on August 18, eliminating the 11% tariff on cotton imports. This included 5% basic customs duty, 5% agriculture infrastructure and development and 1% surcharge on both.
The exemption is temporary
The import duty on cotton has been removed from August 19 to September 30. This exemption is temporary. Its purpose is to coincide with India’s new cotton marketing year, which is going to start in October.
But the USDA statement said that the move will help Indian textile exporters get cheaper and better-quality raw materials. Competitive countries such as Bangladesh, Indonesia, Cambodia and Vietnam enjoy very low tariff rates in the US, leaving Indian exporters in a vulnerable position.
How much cotton does the US sell to India?
India imported US cotton worth $147.13 million in 2020. This increased to $211.32 million in 2021 and $491.20 million in 2022. But in the next two years, it reduced to $223.69 million and $209 million. However, in the first six months of In the first half of 2025 (January-June), exports increased by 109% to $181.46 million, compared with $86.89 million. million in the same period of 2024. According to the USDA, around 95% of US cotton sent to India is processed and re-exported as textiles and apparel. The US is India’s largest market, where India exports about $6 billion worth of cotton-based textiles and apparel.