Centre extends cotton import relief; TN, industry push for more sops

Tamil Nadu and industry bodies urge higher export incentives, faster EU trade deal and wider market access as US tariff hits Tiruppur's exports; Centre extends cotton relief till December 31

To tide over the impact of the 50 per cent tariff imposed by the United States on the textile industry, the Tamil Nadu government sought swift action from the Centre, including a rise of at least 10 per cent in export incentives to support the Tiruppur cluster. Industry players also urged the Centre to provide incentives, assist in identifying alternate markets, and expedite the European Union trade deal.

 

Some industry representatives further sought government intervention to secure duty-free access to the Russian market. To augment cotton availability for the domestic textile sector, the Union government had exempted import duty on cotton between August 19 and September 30, 2025. On Thursday, the Centre extended the exemption till December 31. Duty-free cotton imports are expected to lower costs by 1–5 per cent, depending on the cotton component in a product, as international cotton is priced about 10 per cent below Indian cotton.

 

 

Seeking a 10 per cent rise in incentives, Tamil Nadu Industries Minister TRB Rajaa cited exporters in Tiruppur, who warned that the region was facing losses of about Rs 2,000 crore per month, equivalent to 40 per cent of Tiruppur’s total exports. The government has already raised export drawback rates for gold, silver and gem-studded jewellery to 22–30 per cent. “This is proof that similar support is possible for textiles too. While we in Tamil Nadu expected the Union government to act swiftly and effectively, today they seem to be standing like a rabbit in headlights. The Union must start acting with diplomatic maturity and move away from hypocritical false bravado,” Rajaa said.

 

Tiruppur, the knitwear capital of India, along with nearby Coimbatore (within a 50 km radius), contributed about 69 per cent, or Rs 44,747 crore, of the total knitwear exports of Rs 65,178 crore in 2024–25. Industry estimates suggest that over Rs 13,000 crore of this came from the US market. With the Donald Trump administration’s higher tariff decision, exports from the region to the US are expected to halve. The impact will be severe, as more than 80 per cent of companies in the cluster fall under the micro, small and medium enterprises (MSME) segment, with revenues below Rs 100 crore. 

 

Apparel Export Promotion Council Chairman Sudhir Sekhri has written to Prime Minister Narendra Modi, warning that the Indian apparel sector risks being edged out of the US market because of the higher tariff. He called for government support and faster conclusion of the EU trade deal. “We will need to intensify our efforts towards market diversification. West Asian markets like Saudi Arabia, Latin American markets such as Mexico and Chile, and Eurasian markets like Russia hold promise. Given its large clothing demand, the EU is an extremely important market, and we would like the FTA with the EU to be fast-tracked to give the Indian apparel industry a level playing field vis-à-vis Bangladesh and Vietnam, who enjoy duty-free access,” Sekhri said.

 

“As the steep additional tariff has been imposed due to buying from Russia, we should urgently request Russia to grant duty-free access to all impacted industries,” said Sanjay Kumar Jain, Managing Director of TT Ltd.

 

“CITI would like to extend its deep gratitude to the Prime Minister and various ministries for providing this lifeline to the textile and apparel sector at this critical juncture. From a societal perspective, this step will ensure factories can operate longer and help dilute the chances of putting countless jobs and livelihoods at risk immediately,” said Rakesh Mehra, Chairman of the Confederation of Indian Textile Industry (CITI), on the decision to allow cotton imports duty-free.