India Waives Cotton Duty Through Dec 31 Amid 50% US Tariffs

- India extends its duty-free cotton import policy to support its textile industry. - The U.S. imposes a 50% tariff on Indian goods, influencing global cotton trade dynamics. 2025-08-28 On August 28, 2025, Reuters reported that India extended its cotton import duty waiver until December 31. The government took this action in response to the U.S. administration imposing a combined 50% tariff on Indian exports, which affect goods such as textiles, gems, jewelry, and leather. The policy aims to reduce input costs for India's textile manufacturers, helping them remain competitive internationally as they face escalating U.S. trade restrictions. To offset the impact of U.S. tariffs, which include a recently added 25% levy that took effect on August 27, the Indian government waived the 11% import duty on cotton. The government initially applied the duty waiver from August 19 to September 30 but has now extended it to provide longer-term support for the textile industry. The extended waiver seeks to stabilize India's labor-intensive sectors and shield small exporters from the repercussions of the higher tariffs. The U.S. remains India's largest export market for apparel and jewelry, with exports to the nation totaling approximately $22 billion in 2024. Industry officials have underscored the importance of the measure, noting its potential to mitigate broader economic risks and preserve jobs. The duty waiver has led to increased imports of cheaper cotton from countries such as the United States, Brazil, and Australia, as this foreign cotton is reportedly 5% to 7% less expensive than domestic varieties, offering cost advantages to textile producers. The Cotton Association of India projects that the influx of competitively priced foreign cotton will drive record imports of approximately 4.2 million bales for the year. However, importing cotton during the domestic harvest season might push local prices lower.