Mumbai/Nova Delhi (Reuters) – A India extended the exemption from Cotton Import For three months, by the end of December, according to a government order on Thursday, while New Delhi seeks to support the local clothing industry that was hit by the heavy US Tariffs.
Imports should support global cotton prices, which deleted losses and rose 0.2% after order. However, they should also reduce the demand for local cotton, pressing household prices, agents said.
India, the second largest cotton producer in the world, had previously announced the exemption on cotton imports from a 11% rate by the end of September. Now it has extended the measure until December 31st.
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Cotton will probably originate from Australia, Brazil, the United States and Africa, which have surplus available for export, said industry representatives.
The duplication of US President Donald Trump’s rates on India imports to up to 50% on products such as clothing and jewelry came into force on Wednesday.
The United States is India’s largest market for clothing and jewelry, with almost $ 22 billion in 2024. India has a 5.8% share in the US clothing market behind China, Vietnam and Bangladesh.
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Tax exemption by the end of the year will allow Indian textile companies to import cheaper cotton, relieving the pressure amid a slowdown in US demand, Reuters Atul Ganatra, president of the India Cotton Association.
“With the extent of tax exemption, imports could reach a record of 4.2 million burdens this year. It is likely that strong imports continue in the first quarter of next year as well,” said Ganatra.
The year of cotton marketing in India runs from October to September.
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The previous import window, which ended in September, was very narrow, a New Delhi merchant from a global trading said.
Textile factories could not import cotton during that period, as the trip from exporting countries usually takes more than a month. But now they can place large quantities for the next period, the merchant said.
The cost of landing imported cotton is about 5% to 7% lower than local supplies, and quality is also higher, a Mumbai merchant said.
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“Most imports will arrive around the quarter of December, just when the local crop hit the market. This is likely to press down local prices,” the merchant said.
