Duty-free cotton imports to strengthen India's position in export markets: Govt

New Delhi, Aug 28 (PTI) The Centre's decision to extend the import duty exemption on cotton until December 31 will strengthen India's position in export markets, reviving orders for small and medium enterprises as well as export-oriented units, the government said on Thursday.

The move comes at a time when the steep 50 per cent tariffs imposed on Indian goods by the US come into effect, with America being the largest export market for the country's textile and apparel exports.

"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," the Textile Ministry said.

It further stated that the strategic intervention of extending the import duty waiver on cotton till December is bound "to help make Indian textiles more competitive in the international market while safeguarding the interests of domestic cotton farmers".

Most imports cater to specialised industrial requirements or brand-linked export contracts and do not replace domestic cotton.

The duty-free imports would stabilize raw material costs, strengthen global competitiveness and sustain employment in the textile-apparel value chain.

Cotton textile exports account for 33 per cent of India's total textile exports.

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 on Thursday extended the import duty exemption on cotton until December 31, 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, the Textile Ministry said.

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 per cent above their cost of production.

The government monitors cotton prices closely and retains the flexibility to impose safeguards as and when required.

With 95 per cent 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. PTI RSN HVA