India blink, remove the service on cotton imports in the trade with us

New -Delhi: In a move that is seen breaking the ice in tense trade relations with the US, the Indian government has removed the Customs service and agricultural strike on cotton imports on Monday, a step that can facilitate the tension observers and create fresh space for involvement. Through a notice issued by the Ministry of Finance, the Central Council of Indirect Tax and Customs (CBIC) said all imports under the heading 5201 – to cover raw cotton – will be exempt from duties between August 19 and September 30. The decision is expected to directly benefit US exporters, which increased the rates on Indian products earlier this year for the easier market access in India. The development comes after months of back and forth between the two parties, with India holding its foundation on sensitive sectors such as agriculture and dairy in bilateral trade conversations. By offering temporary relief on cotton, it appears that New -Delhi indicates flexibility without compromising the core red lines. The US team of negotiators, who would visit New -Delhi on August 25 for the sixth round of talks, canceled his visit, and no fresh date was announced. The 25% reciprocal rates on Indian exports imposed by US President Donald Trump came into effect on August 7 on August 27 when the additional rates were linked to the oil trade in New -Delhi with Russia. Prior to the latest release, cotton imports to India attracted a joint duty of about 11%. “It’s a calibrated gesture that we address while protecting domestic sensitivity,” says Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), a thinking tank. Srivastava added that the short release window enables the government to retain the leverage in continued negotiations. The move is also read against the background of India’s own supply needs. The availability of cotton in the domestic market was accurate, while the industry bodies repeatedly repeatedly printed the risk of higher yarn prices and downstream costs in textile flag. By allowing tax -free imports, the government aims to cool down raw material prices before the festive season when demand for garments usually rises. For the US, the release is significant. With China slamming extra duties on American cotton, India has emerged as a promising alternative market. Industry leaders said the removal of the duty could help to bridge some of the recent distrust. ‘Cotton was a point in the discussions. This move can inject goodwill in the dialogue and perhaps pave the way for broader tariff concessions in textiles, ‘said an executive officer with a leading association for clothing exporters. “Citi (Confederation of Indian Textile Industry) has long been asking for the import duty on cotton to help domestic prices to align with international prices. So we welcome the measure taken by the authorities, even if the relief is only temporarily available,” said Chandrima Chatterjee, secretary of Citi. India enter cotton from a handful of key providers. The largest share comes from the US, which has become an important source, especially after China imposed extra duties on American cotton. Other important suppliers include Brazil, Egypt and some African countries such as Benin, Tanzania and Mali, offering long-walking and extra-long pile varieties that are not widely grown in India. Australia also contributes, although shipping varies depending on production cycles. According to the Cotton Association of India, imports in FY25 have risen to 2.71 million bales, compared to 1.52 million bales in FY24 and 1.46 million bales in FY23. Each bale is equivalent to 170 kg. The cotton production of India has dropped from approximately 33.7 million bales in 2022-23 to 32.5 million bales in FY24 and an estimated 30.7 million bales in FY25, according to the data from the Ministry of Ministry. (The cotton production year runs from October to September.) According to the US Department of Agriculture, China is the world’s largest cotton producer, with its 32 million bales in 2024/2025, accounting for 26% of global production. India stood second with its 25 million bales, accounting for 21% of global cotton production.