New Delhi — India has suspended an 11% import duty on cotton until September 30, in a move seen as a signal to Washington that New Delhi is willing to address US concerns on agricultural tariffs, while also easing pressure on its garment industry.
The temporary suspension, announced late on Monday, could benefit US cotton growers and provide relief to India’s apparel sector, which faces tariffs of nearly 60% on shipments to the US from later this month.
A planned visit by US trade negotiators to New Delhi on August 25-29 has been called off, delaying talks on a proposed bilateral trade agreement and dashing hopes of relief from an additional 25% US tariff on Indian goods from August 27.
President Donald Trump earlier this month announced an extra tariff on Indian goods as punishment for New Delhi’s purchases of Russian oil, doubling the total duty to 50% on US imports of Indian goods from later this month.
Indian exports had previously faced levies of 0%-5%, with duties on some textiles of 9%-13% before Trump raised tariffs in April.
The US is the biggest market for India’s garment exporters, who say steep tariffs are leading to order cancellations and making them uncompetitive against Bangladesh and Vietnam, which have US duties of 20%, and China at 30%.
Largest beneficiary
India’s labour-intensive sectors, including textiles, footwear, engineering goods and shrimp, have been jolted by US tariffs, and are now seeking alternative markets.
“The largest beneficiary of the duty-free import will be the US, the second-largest supplier to India,” said Ajay Srivastava, founder of Global Trade Research Initiative, a New Delhi-based think-tank, adding India already allows duty-free cotton imports from Australia within a quota.
Cotton imports more than doubled to $1.2bn in the 2024/25 fiscal year to March, from $579m a year earlier, led by $258m from Australia, $234m from the US, $181m from Brazil and $116m from Egypt, Srivastava said.
The sharp rise in US tariffs comes just as India was emerging as a stronger alternative for American garment buyers, with Bangladesh facing political uncertainty and companies seeking to diversify supply chains beyond China.
Industry bodies such as the Confederation of Indian Textile Industry (CITI) had urged the government to scrap the cotton import duty to help make the sector more competitive.
Some Indian exporters were scrambling earlier to explore manufacturing options overseas to offset the impact of the higher tariffs.
India’s garment sector was already grappling with a labour crunch and limited production capacity. The prospect of exporters relocating production abroad poses a further challenge to the government’s “Make in India” manufacturing drive.
Industry officials now expect the government to extend duty-free cotton imports beyond September.
Reuters
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