The government exempted all cotton imports from tariffs from April 14 to September 30, 2022 to help the textile industry cope with raw material shortages. The move will also support exports and ease the burden on consumers, the Treasury said.
A surge in domestic cotton prices due to lower-than-expected crop yields had squeezed the textile sector’s export competitiveness vis-à-vis rivals such as Vietnam and Bangladesh, which do not impose import tariffs on cotton. Cotton imports are taxed at about 11% in India, including duties and surcharges.
Higher cotton prices were also reflected in apparel and footwear inflation faced by domestic consumers, which rose to 9.4% in March as retail inflation hit a 17-month high.