Cotton Duty Relief: NITMA Welcomes Govt Move, But Seeks GST Rationalization Too

By 121 News

Ludhiana, August 20, 2025:--The Northern India Textile Mills Association (NITMA) has lauded the Government of India's decisive move to exempt import duties on all varieties of cotton (HSN 5201), effective from August 19 to September 30, 2025, as notified by the Ministry of Finance Notification No. 35/2025-Customs dated 18.08.2025.

The exemption covers 5% customs duty, 5% Agriculture Infrastructure and Development Cess (AIDC), and 1% additional cess, offering much-needed relief to the textile industry.

Munish Avasthi, Senior Vice President of NITMA, commended the Prime Minister Narendra Modi and the Ministers Giriraj Singh and Smt. Nirmala Sitharaman for swiftly addressing the textile industry's pressing concerns which shall help achieve India's USD 100 billion textile export target, since the sector had been grappling with high raw material costs and a widening gap between domestic and global cotton prices.

Munish Avasthi said that the removal of import duty on cotton is a strategic intervention that will stabilize the supply chain and support the entire cotton value chain during a period of acute raw material stress.

 However, he also flagged a concern regarding the limited duration of the exemption, noting that cotton shipments from key sourcing countries such as the USA and Brazil, generally require 70-75 days, potentially limiting the benefit for importers.  

On the man-made fiber (MMF) front, Sidharth Khanna, President of NITMA, highlighted the long-standing issue of Inverted Duty Structure (IDS) under GST, which continues to hinder growth and investment across the MMF textile value chain.

While commending the government's proactive stance on cotton, Siddarth Khanna urged the Ministries of Finance and Textiles to extend similar support to MMF sector by adopting a uniform 5% GST rate across the MMF value chain, in line with the cotton value chain by reducing GST on MMF yarn from 12% to 5%, and on inputs like PTA, MEG, and man-made fibers from 18% to 5%.

Siddarth Khanna reiterated that correcting this anomaly would ease working capital constraints, especially for MSMEs, by reducing reliance on complex refund mechanisms and improving liquidity;  address cost disparities, as imported synthetic yarn—subject to just 5% duty or nil under FTAs—remains more economical than domestic yarn, which accumulates taxes; encourage investment, by resolving the non-adjustment of 18% GST on machinery due to IDS; and boost global and domestic competitiveness, without impacting government revenue, since fabrics are already taxed at 5%.