The United States (US) will come forward as the largest beneficiary of the full distance of customs and agricultural infrastructure and development COSS (AIDC) about the import of rough cotton, which was announced this month by the center according to the Global Trade Research Initiative (GTRI).
“Under the India-Australia ECTA, 51,000 MT of such cotton is already tax-free, but the biggest profit is now the US, the second largest supplier of India,” said the GTRI in its latest analysis remark. Cotton normally attracts 11 percent import obligation (5 percent BCD + 5 percent AIDC), in place since February 2021.
According to a government report, a full distance from the import of cotton is a short-term measure, only until December 2025, to support India textile and clothing, to improve global competitiveness and comes without a disadvantage for Indian farmers.
However, Gtri says that direct tax -free import gives immediate access to global supplies, especially to companies that make high -quality items of clothing using superior fibers. “The short unemployed window will relieve the shortages of the raw material for yarn and fabric exporters prior to the festive season,” the policy think tank has added in its note.
On August 19, during the relocation, the Ministry of Finance said that the exemption will apply to cotton that falls under 5201 of the Customs Tariff Act, 1975. The distance of distance will take effect from 19 August 2025 and will remain valid until September 30, 2025.
However, the same was extended until 31 December on 28 August 2025. The Ministry of Finance had said that the decision was taken in the public interest in alleviating the raw material costs for domestic manufacturers and exporters at a time that the textile sector is confronted with price volatility and delivery pressure.
The memorandum emphasized that India’s Cotton import has more than doubled to $ 1.20 billion in FY2025 of $ 579.2 million in FY2024. Large suppliers last year were Australia ($ 258.2 million), the US ($ 234.1 million), Brazil ($ 180.8 million) and Egypt ($ 116.3 million). Almost 99 percent of this import is of longer cotton (28 mm and higher), which is not grown in sufficient quantity in India.
Gtri comment added that this means that the exemption has no influence on local farmers, which mainly produce on average and short cotton.
The exemption from the import of cotton has also attracted criticism from the political parties, as former Delhi Chief Minister and Aam Aadmi Party Convenor Arvind Kejriwal On Thursday, the Union government criticized that the Indian cotton farmers have under pressure under pressure from US President Donald Trump. Kejriwal said that because of the 11 percent duty on the American cotton, the cotton of Indian farmers easily sold on the Indian market.
Published on August 28, 2025
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