Central government scraps 10% import duty on U.S. cotton

August 20, 2025 by News Desk

The Modi government has scrapped the 10% import duty on cotton from August 19 to September 30, 2025. The step comes just days before India’s new cotton harvest, sparking anger among farmers who fear a price crash.

In an official notification issued by the Central Board of Indirect Taxes and Customs (CBIC) on August 19, the government announced that all duties on raw cotton — including the 5% Basic Customs Duty (BCD), 5% Agriculture Infrastructure & Development Cess (AIDC), and the 10% Social Welfare Surcharge, would remain exempt until September 30. The CBIC order stated the decision was taken “in public interest.”

The announcement comes amid escalating trade tensions, with the United States recently imposing fresh tariffs on Indian goods.

While the textile industry has welcomed cheaper imports, farmers’ groups have warned of devastating consequences. The Cotton Corporation of India (CCI) could face losses of over ₹700 crore, and farmers may struggle to secure the promised Minimum Support Price (MSP) of ₹61,000 per candy, as imported U.S. cotton is expected to sell for ₹50,000–51,000 per candy.

“This is a betrayal,” said a farmers’ representative from Vidarbha. “When the Prime Minister says farmers’ interests are his top priority, how can the government allow heavily subsidised U.S. cotton to crush our markets?”

Critics argue that U.S. cotton, backed by heavy subsidies, distorts global prices and leaves Indian farmers vulnerable. Farmers’ groups have also warned the step could worsen debt and suicides in cotton-growing regions such as Vidarbha and Telangana, while industries stand to benefit from lower input costs.

The government is expected to lose around ₹170 crore in customs revenue from the exemption.