India extends cotton import duty waiver to year-end

India has extended its waiver on import duty for cotton by three months, pushing the deadline to Dec. 31, a government order showed on Thursday. The move is aimed at helping the country’s garment makers, who are under stress from steep U.S. tariffs.

Global cotton prices turned higher after the decision, reversing earlier losses to rise 0.2%. Traders said the extra imports would likely dent demand for local fibre and weigh on domestic prices. India earlier removed an 11% duty on cotton imports through September; that waiver now runs until Dec. 31.

Industry officials expect the additional supply to come from Australia, Brazil, the United States, and several African producers, all of which have exportable surpluses this season.

India’s duty extension comes as a U.S. measure took effect on Wednesday.  As reported by Cryptopolitan, an additional 25% tariff, tied to India’s purchases of Russian oil, was added to an existing 25% duty on many Indian imports, taking the total on affected goods to as much as 50%.

The combined rate covers items such as garments, gems and jewellery, footwear, sporting goods, furniture and chemicals, and ranks among the highest imposed by the United States, broadly similar to levels for Brazil and China.

The step has strained relations between the two large democracies, which in recent years had described one another as strategic partners.

Small exporters and jobs at risk in India

The new tariffs threaten thousands of small exporters and jobs across India, including in Prime Minister Narendra Modi’s home state of Gujarat. Economists said the hit could slow momentum in what has been the world’s fastest-growing major economy.

There was no sign of fresh negotiations between Washington and New Delhi on Wednesday. Five earlier rounds of talks did not produce a deal to roll U.S. tariffs back toward about 15%, similar to arrangements the United States has with Japan, South Korea, and the European Union. Officials on both sides described the talks as marred by misjudgments and missed signals.

In 2024, the U.S. was India’s biggest destination for apparel and jewellery, buying close to $22 billion. As per Reuters, India holds about 5.8% of the U.S. clothing market, trailing China, Vietnam, and Bangladesh.

Duty-free cotton expected to ease costs for mills

“With the duty-free extension, imports could hit a record 4.2 million bales this year. Strong imports are likely to continue into the first quarter of next year as well,” said Atul Ganatra, president of the Cotton Association of India.

The cotton marketing season in India runs from October through September.

A New Delhi-based trader at a global house said the earlier cutoff in September was too tight because shipments from key suppliers often take more than a month at sea. With more time, mills can book larger volumes for arrival after the voyage.

A Mumbai-based trader said the landed price of imported cotton is about 5% to 7% below local fibre, and quality is typically better. Most shipments will arrive in the December quarter, just as the local harvest comes in, which could push prices down.

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