Shares of Vardhman Textiles Ltd rallied more than 7% to ₹439 on Tuesday, August 19, after the government temporarily removed the 11% customs duty on raw cotton imports. The exemption, effective from August 19 till September 30, is aimed at providing immediate relief to the textile and garment industry, which has been reeling under rising costs and global trade headwinds.
In a notification, the Central Board of Indirect Taxes and Customs (CBIC) said the exemption applies to both basic customs duty and Agriculture Infrastructure and Development Cess (AIDC). Industry players say the move will ease pressure on domestic manufacturers by aligning cotton prices in India with international benchmarks.
The Confederation of Indian Textile Industry (CITI) welcomed the move, noting it had been a long-pending demand. “CITI has long been requesting that the import duty on cotton be removed to help domestic cotton prices align with international prices. We, therefore, greatly welcome this measure taken by the authorities, even though the relief is only available temporarily,” said Chandrima Chatterjee, Secretary, CITI.
The measure comes at a time when India’s exporters are facing significant challenges in the US market, after Washington imposed 50% tariffs on Indian textile and apparel shipments—much higher than the 20% for Bangladesh, 19% for Indonesia and Cambodia, and 30% for China. Exporters have flagged concerns of revenue loss and the risk of ceding market share to rivals such as Vietnam and Bangladesh, which continue to grow at double-digit rates.
India has set an ambitious target of achieving $100 billion in textile exports by 2030, but the industry remains at a competitive disadvantage. Exporters said while the duty exemption may not result in large additional shipments, it is an immediate confidence booster for the sector and could help cushion the blow from higher tariffs abroad.
According to CITI data, India’s exports to the US rose to $5.36 billion in the first half of 2024, up 12% from $4.79 billion a year ago, ranking the country third behind China and Vietnam. However, exporters warn that without tariff parity, India’s gains could be temporary.
Market experts believe the cotton duty exemption could benefit companies like Vardhman Textiles, Arvind, Welspun, Trident, and Raymond, which are heavily exposed to the yarn, fabric, and garment segments.
