**Policy Summary: Extension of Import Duty Exemption on Cotton**
The Indian government, through the Ministry of Textiles, has extended the import duty exemption on cotton until December 31, 2025. This decision, notified by the Central Board of Indirect Taxes and Customs, aims to enhance the competitiveness of the Indian textile industry in the global market while protecting the interests of domestic cotton farmers.
The primary rationale for the extension is to stabilize raw material costs for the textile value chain, encompassing yarn, fabric, garments, and made-ups, thereby providing relief to manufacturers and consumers. The government recognizes the persistent demand-supply gap in the domestic cotton market and seeks to ensure stable access to high-quality cotton for the industry, India's second-largest employment provider.
The duty-free import policy is intended to strengthen India's position in export markets, particularly for small and medium enterprises and export-oriented units. Notably, cotton textile exports accounted for approximately 33% of India's total textile and apparel exports during April-October 2024-25, amounting to USD 7.08 billion, second only to readymade garments. The policy supports the government's "Make in India" initiative by spurring the production of higher-value fabrics and garments.
The interests of domestic cotton farmers are safeguarded through the Minimum Support Price (MSP) mechanism operated by the Cotton Corporation of India Ltd. (CCI), ensuring farmers receive at least 50% above their cost of production. The government also monitors cotton prices closely and retains the flexibility to impose safeguards as needed. It is also worth noting that imported cotton often caters to specialized industrial requirements or brand-linked export contracts and does not typically substitute domestic cotton, with imports primarily occurring during lean periods or when domestic stocks are insufficient.
Various textile associations have welcomed the government's decision, acknowledging its importance in addressing the industry's longstanding demand for duty-free cotton imports. This measure is expected to indirectly benefit farmers as global competitiveness enables mills to pay better prices for cotton. The textile apparel value chain employs over 45 million people, and a stable cotton supply is considered crucial for preventing job losses and encouraging industry growth.
Key Entities Referenced
Ministry of Textiles: The Indian government ministry responsible for the formulation of policy and coordination of textile industry matters.
Cotton: A natural fiber and a key raw material for the textile industry, the policy discusses import duty exemptions on it.
Central Board of Indirect Taxes and Customs: The government agency that notified the decision regarding the import duty exemption on cotton.
Make in India: A Government of India initiative to encourage domestic manufacturing.
Cotton Corporation of India Ltd: A government agency that operates the Minimum Support Price (MSP) mechanism to protect farmers' interests.
Shri Narendra Modi: The Prime Minister of India
Shri Giriraj Singh: The Union Minister of India, likely related to the Ministry of Textiles or related portfolio.
Delhi: Location of the Press Information Bureau (PIB) where the release was posted.
Ministry of Textiles
Import duty exemption on Cotton extended till 31st
December 2025
The Strategic intervention to help make Indian
textiles more competitive in the international market
while safeguarding the interests of domestic cotton
farmers
Duty-free imports to stabilize raw material costs,
strengthen global competitiveness, and sustain
employment in textile-apparel value chain
Cotton textile exports account for 33% of India’s total
textile exports, helping sustained demand of cotton
benefiting farmers directly
Posted On: 28 AUG 2025 7:56PM by PIB Delhi
India’s textile industry, the country’s second-largest employment provider, requires stable access to high-
quality cotton. In view of the persistent demand–supply gap, the Government has extended the import duty
st
exemption on cotton until 31 December 2025. The decision, notified by the Central Board of Indirect Taxes
and Customs, is expected to stabilise the input costs across the textile value chain, including yarn, fabric,
garments, and made-ups, providing relief to manufacturers and consumers alike.This strategic intervention
ensures that the textile sector remains globally competitive while safeguarding the interests of domestic cotton
farmers. Most imports cater to specialized industrial requirements or brand-linked export contracts and do not
replace domestic cotton.
Affordable, high-quality cotton strengthens India’s position in export markets, reviving orders for small and
medium enterprises as well as export-oriented units. The textile-apparel value chain employs over 45 million
people, and stable cotton supply is crucial to prevent job losses and encourage industry growth. Consistent
raw material supply expected to spur the production of higher-value fabrics and garments, supporting the
government’s ‘Make in India’ and domestic manufacturing goals.
Farmers’ interests are safeguarded through the Minimum Support Price (MSP) mechanism operated by the
Cotton Corporation of India Ltd. (CCI), which ensures that farmers receive at least 50% above their cost of
production. Imported cotton often caters to specialized industrial requirements and does not substitutedomestic cotton. Most imports occur during lean periods or when domestic stocks are insufficient, which
minimizes competition with peak domestic procurement periods. The government monitors cotton prices
closely and retains the flexibility to impose safeguards as and when required.
Cotton textile exports accounted for approximately 33% of India’s total textile and apparel exports during
April–October 2024–25, valued at USD 7.08 billion, making it the second-largest contributor after readymade
garments. With 95% of domestic cotton consumed by the textile industry, the duty exemption is expected to
indirectly benefit farmers as global competitiveness enables mills to pay better prices to cotton farmers.
Various textile associations have welcomed the government’s move to exempt all varieties of cotton from the
st
11% import duty up to 31 December 2025 and expressed gratitude to the Prime Minister Shri Narendra Modi
and the Union Minister Shri Giriraj Singh for addressing the long-standing demand of the industry.
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MAM/SMP
(Release ID: 2161664)