Tariff Aftermath: India Moves To Shield Cotton Industry, Allows Duty Free Imports Till Year-End

Textiles, along with gems and jewellery, and machinery, account for a significant portion of India’s exports to the United States, worth over $48 billion annually.

Alongside immediate relief measures, the government is working on a broader strategy to reduce reliance on the US market.

Source : Freepik

With US President Donald Trump’s 50 per cent tariffs now in force, the Indian government has announced a fresh relief measure aimed at shielding sensitive sectors. In its latest decision, New Delhi has extended the exemption on cotton imports from the 11 per cent import duty until 31 December, revising the earlier deadline of end-September.

The decision is aimed at providing relief to the domestic textile industry, which is among the hardest hit by Washington’s steep tariffs. Textiles, along with gems and jewellery, leather, footwear, and machinery, account for a significant portion of India’s exports to the United States—worth over $48 billion annually—and are now facing major cost disadvantages in the American market.

Industry Sounds Alarm Over Tariff Impact

The Apparel Export Promotion Council (AEPC) warned that textiles—with exports of $10.3 billion—is the second most affected sector after gems and jewellery. “The apparel industry was reconciled to the 25 per cent reciprocal tariff announced by the USA, as it was prepared to absorb a part of the tariff increase. But, the additional burden of another 25 per cent tariff, taking the overall reciprocal tariff against India to 50 per cent, has effectively driven the Indian apparel industry out of the US market as the gap of 30-31 per cent tariff disadvantage vis-a-vis major competing countries like Bangladesh, Vietnam, Sri Lanka, Cambodia & Indonesia,” said Mithileshwar Thakur, Secretary General, AEPC.

Thakur added that urgent fiscal support is essential to sustain operations until a bilateral agreement is reached. “It is not easy to recover lost ground once buyers move to other cost-competitive locations. We are also intensifying efforts towards market diversification and looking at every possibility to take advantage of the trade deal with the UK and EFTA countries to control and contain the damage,” he said.

Diversification Drive: Outreach in 40 Countries

Alongside immediate relief measures, the government is working on a broader strategy to reduce reliance on the US market. According to an official, India plans dedicated outreach programmes in 40 key markets, including the UK, Japan, South Korea, Germany, France, Italy, Spain, Canada, Mexico, Russia, the UAE, and Australia.

India has planned this move to position itself ‘as a reliable supplier of quality, sustainable, and innovative textile products with the lead role of the Indian industry, including EPCs and Indian Missions in these countries’.

These 40 countries together represent more than $590 billion in textile and apparel imports, while India’s current share remains just 5-6 per cent. By strengthening its presence in these markets, India hopes to offset the impact of lost opportunities in the US.

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