Import duty on raw cotton waived off till September-end

New Delhi: The government on Tuesday said it is suspending import duty on raw cotton until September 30, a move expected to ease domestic supply of the raw material.

Raw cotton imports face a total duty of 11% with the inclusion of agriculture infrastructure and development cess.

Experts also see the duty waiver as a signal to the US, which recently increased tariffs on Indian imports. India's move could benefit American cotton growers.


Industry says the suspension of import duty will ensure raw material availability at globally competitive rates for the textiles sector, which is now looking for markets beyond the US.

"Global brands from Europe, Japan etc. want textile exporters to use the ELS (extra-long staple) cotton from the US and Egypt," said Sanjay Jain, former chairman of CITI.

The duty removal is expected to help increase import of cotton--other than the ELS variety--from the US to meet the needs of premium exports.

At present, India imports about 500,000 tonnes of ELS cotton from the US. The import of other grades of cotton from the US is less as they are expensive compared with cotton from Brazil and Africa.

"The cotton duty exemption will throw opportunities to increase exports to the UK and other countries considerably," said SK Sundararaman, chairman of South India Mills Association (SIMA).