India waives customs duty on cotton to support textile sector

The waiver on customs duties by India on cotton includes the elimination of a 5% Basic Customs Duty (BCD), a 5% Agriculture Infrastructure and Development Cess (AIDC), and a 10% Social Welfare Surcharge, which together constituted an 11% import duty on cotton. The Central Board of Indirect Taxes and Customs (CBIC) announced this decision with the expectation that it will reduce input costs throughout the textile value chain, including yarn, fabric, garments, and made-ups.

The move is anticipated to provide relief to apparel and textile manufacturers and consumers.

The exemption may be an advantage for US cotton producers and support India’s clothing sector, which is bracing for tariffs close to 60% on its US exports starting later this month, according to Reuters.

The textile industry has been advocating for the removal of import duties on cotton due to escalating domestic prices and supply constraints.

The Indian government’s decision to waive these duties aims to increase raw cotton availability in the domestic market, stabilise prices to curb inflation on textile products, enhance the export competitiveness of Indian textiles by reducing production costs, and protect small and medium-sized enterprises in the textile sector from price volatility, according to the Ministry of Textiles.

Source:  Reuters