New Delhi, Jan 2 (UNI) The temporary window allowing duty-free import of cotton has come to an end, with the government reinstating the 11 pc customs duty on cotton imports from January 1. The duty-free period, which was in place until December 31, was not extended further, bringing back the earlier tax structure on imported cotton.
The duty exemption was introduced to ease supply pressures faced by the domestic textile industry during a period of lower cotton availability and rising prices. During this window, mills were able to import cotton without paying customs duty, helping them manage raw material costs.
With the exemption now withdrawn, imported cotton will again attract an 11% duty, including basic customs duty and cess. This is expected to make overseas cotton purchases costlier for textile mills and traders going forward. However, imports from certain least developed countries will continue to attract a lower duty as per existing trade provisions.
Domestic cotton arrivals this season have been lower compared to last year, and overall production is estimated to remain below normal levels. These factors had earlier prompted the government to allow duty-free imports to ensure adequate availability for the textile sector.
Meanwhile, the Cotton Corporation of India continues to procure cotton at the minimum support price to support farmers. Procurement operations are ongoing in key cotton-growing states wherever market prices fall below the support level.
The return of the import duty is expected to provide support to domestic cotton prices while encouraging the use of locally produced cotton. The impact of the restored duty on imports, domestic prices and textile industry costs will become clearer in the coming weeks.
