India’s strategic suspension of cotton duty on imports represents a calculated diplomatic gesture aimed at demonstrating goodwill toward Washington while providing critical relief to its embattled textile sector. The temporary removal of the 11% tariff until September 30 signals New Delhi’s willingness to address American concerns about agricultural trade barriers, even as bilateral negotiations remain stalled. This move comes as India’s garment industry faces unprecedented pressure from escalating US tariffs that threaten to devastate one of the country’s most labor-intensive export sectors.
Temporary duty suspension details
India has suspended an 11% import duty on cotton until September 30, in a move seen as a signal to Washington that New Delhi is willing to address U.S. concerns on agricultural tariffs, while also easing pressure on its garment industry.
The temporary suspension, announced late on Monday, could benefit U.S. cotton growers and provide relief to India’s apparel sector, which faces tariffs of nearly 60% on shipments to the United States from later this month.
A planned visit by U.S. trade negotiators to New Delhi from August 25-29 has been called off, delaying talks on a proposed bilateral trade agreement and dashing hopes of relief from an additional 25% U.S. tariff on Indian goods from August 27.
President Donald Trump earlier this month announced an extra tariff on Indian goods as punishment for New Delhi’s purchases of Russian oil, doubling the total duty to 50% on U.S. imports of Indian goods from later this month.
Impact on garment exports and competitiveness
Indian exports had previously faced levies of 0-5%, with duties on some textiles ranging between 9% and 13% before Trump raised tariffs in April.
The United States is the biggest market for India’s garment exporters, who say steep tariffs are leading to order cancellations and making them uncompetitive against Bangladesh and Vietnam, which have U.S. duties of 20%, and China at 30%.
India’s labour-intensive sectors, including textiles, footwear, engineering goods and shrimp, have been jolted by U.S. tariffs, and are now seeking alternative markets.
“The largest beneficiary of the duty free import will be the U.S., the second largest supplier to India,” said Ajay Srivastava, founder of Global Trade Research Initiative, a New Delhi-based think tank, adding India already allows duty-free cotton imports from Australia within a quota.
Cotton imports more than doubled toย 1.2billioninthe2024/25fiscalyeartoMarch,from579 million a year earlier, led byย 258millionfromAustralia,234 million from the United States,ย 181millionfromBraziland116 million from Egypt, Srivastava said.
The sharp rise in U.S. tariffs comes just as India was emerging as a stronger alternative for American garment buyers, with Bangladesh facing political uncertainty and companies seeking to diversify supply chains beyond China.
Cotton import dynamics and market response
Industry bodies such as the Confederation of Indian Textile Industry (CITI) had urged the government to scrap the cotton import duty to help make the sector more competitive.
Reuters earlier reported that some Indian exporters were scrambling to explore manufacturing options overseas to offset the impact of the higher tariffs.
India’s garment sector was already grappling with a labour crunch and limited production capacity. The prospect of exporters relocating production abroad poses a further challenge to the government’s “Make in India” manufacturing drive.
Industry officials now expect the government to extend duty-free cotton imports beyond September.
India’s cotton duty suspension represents a pragmatic response to escalating trade tensions that threaten to undermine decades of export growth in labor-intensive industries. The move demonstrates New Delhi’s willingness to make concessions on agricultural tariffs while highlighting the vulnerability of emerging economies to sudden shifts in trade policy from major markets. As the September 30 deadline approaches, the effectiveness of this diplomatic gesture will depend on whether it can catalyze broader negotiations that address the underlying structural issues driving US-India trade disputes.
GCN.com/Reuters.