The exemption removes both the basic customs duty and the Agriculture Infrastructure and Development Cess.
Shares of Indian textile companies surged in early trade on Tuesday after the government paused the 11% import duty on raw cotton for 42 days, effective August 19 to September 30.
At the time of writing, shares of Welspun Living (+6%), Vardhman Textiles (+8.23%), Raymond (+4.4%), Arvind (+2.6%), Nitin Spinners (+5.45%), Ambika Cotton (+5.67%), Kitex Garments (+5%) and Vardhman Polytex (+4.55%) were trading in the green.
The exemption removes both the basic customs duty and the Agriculture Infrastructure and Development Cess (AIDC). The move will likely help the entire textile value chain, spanning yarn, fabrics, garments, and made-ups, while easing costs for manufacturers and consumers.
Tariff Breather
The decision comes at a critical time, after US President Donald Trump imposed a 50% tariff on Indian textile exports to the American market, compared to 20% for Bangladesh, 19% for Vietnam and Cambodia, and 30% for China. This has reportedly prompted major US retailers, including Walmart, Target, Amazon, and H&M, to ask Indian suppliers to delay shipments, creating uncertainty across the sector.
Long-term Goals
Despite these headwinds, India has set an ambitious target of $100 billion in textile exports by 2030. In the first half of 2024, India’s textile and apparel exports to the US rose 12% to $5.36 billion, ranking third behind Vietnam and China. However, industry players warn that unless tariff disadvantages are addressed, India risks losing market share to its regional competitors.
Industry bodies such as the Confederation of Indian Textile Industry (CITI) have long pressed for duty-free cotton imports, citing the need for contamination-free, high-quality raw material to meet global compliance standards.
For updates and corrections, email newsroom[at]stocktwits[dot]com.<