By Nikunj Ohri and Manoj Kumar
NEW DELHI -India has suspended an 11% import obligation on cotton till September 30, in a transfer seen as a sign to Washington that New Delhi is keen to deal with U.S. considerations on agricultural tariffs, whereas additionally easing stress on its garment business.
The non permanent suspension, introduced late on Monday, may benefit U.S. cotton growers and supply aid to India’s attire sector, which faces tariffs of practically 60% on shipments to the USA from later this month.
A deliberate go to by U.S. commerce negotiators to New Delhi from August 25-29 has been referred to as off, delaying talks on a proposed bilateral commerce settlement and dashing hopes of aid from a further 25% U.S. tariff on Indian items from August 27.
President Donald Trump earlier this month introduced an additional tariff on Indian items as punishment for New Delhi’s purchases of Russian oil, doubling the full obligation to 50% on U.S. imports of Indian items from later this month.
Indian exports had beforehand confronted levies of 0-5%, with duties on some textiles ranging between 9% and 13% earlier than Trump raised tariffs in April.
The USA is the largest marketplace for India’s garment exporters, who say steep tariffs are resulting in order cancellations and making them uncompetitive in opposition to Bangladesh and Vietnam, which have U.S. duties of 20%, and China at 30%.
India’s labour-intensive sectors, together with textiles, footwear, engineering items and shrimp, have been jolted by U.S. tariffs, and are actually looking for various markets.
“The biggest beneficiary of the obligation free import would be the U.S., the second largest provider to India,” stated Ajay Srivastava, founding father of International Commerce Analysis Initiative, a New Delhi-based suppose tank, including India already permits duty-free cotton imports from Australia inside a quota.
Cotton imports greater than doubled to $1.2 billion within the 2024/25 fiscal 12 months to March, from $579 million a 12 months earlier, led by $258 million from Australia, $234 million from the USA, $181 million from Brazil and $116 million from Egypt, Srivastava stated.
The sharp rise in U.S. tariffs comes simply as India was rising as a stronger various for American garment consumers, with Bangladesh going through political uncertainty and corporations looking for to diversify provide chains past China.
Business our bodies such because the Confederation of Indian Textile Business had urged the federal government to scrap the cotton import obligation to assist make the sector extra aggressive.
Reuters earlier reported that some Indian exporters had been scrambling to discover manufacturing choices abroad to offset the impression of the upper tariffs.
India’s garment sector was already grappling with a labour crunch and restricted manufacturing capability. The prospect of exporters relocating manufacturing overseas poses an extra problem to the federal government’s “Make in India” manufacturing drive.
Business officers now anticipate the federal government to increase duty-free cotton imports past September.
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