India’s December quarter cotton imports jump amid duty-free import push

India’s cotton imports reached a record 3.1 million bales in the December quarter. This surge followed New Delhi’s decision to allow duty-free imports. Imports are projected to hit a new high of 5 million bales in the 2025/26 marketing year. Despite higher local crop estimates, increased imports may impact domestic prices.

China is now growing and exporting cumin and chillies, key Indian spice exports. This development poses a challenge to India’s global leadership in spices. Chinese spices are often cheaper, even after local processing. This shift’s impact will become visible in the coming seasons. Farmers are planting less due to crop losses and low export prices.

Indian basmati rice exports are facing a significant setback as payments worth approximately ₹2,000 crore are stuck as protests in Iran have halted trade. Iran, a major buyer, is unable to remit payments or honor contracts. This disruption is causing uncertainty for exporters, impacting basmati rice prices in India’s wholesale markets.

US President Trump announced a 25% tariff on countries trading with Iran, aiming to pressure Tehran amidst anti-government protests. However, the move is expected to have a limited impact on India’s overall trade, as most of its exports to Iran are humanitarian in nature and already compliant with US sanctions.

India’s trade with Iran is minimal, representing a small fraction of its total commerce. Recent US tariff announcements targeting countries doing business with Iran are not expected to significantly affect India’s economic engagement. Indian exporters remain watchful but composed. Trade with Iran is projected to decline further due to external economic factors.

External Affairs Minister S Jaishankar held discussions with US Secretary of State Marco Rubio, covering trade, critical minerals, nuclear cooperation, defense, and energy. Both leaders agreed to maintain ongoing contact on these vital bilateral issues.

Officials are evaluating changes to the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI), which relies primarily on import duty concessions, including the introduction of more direct incentives, to entice global premium EV makers to establish manufacturing bases in India.

US Ambassador designate Sergio Gor announced that trade pact discussions with India will resume Tuesday, aiming to resolve differences beyond tariffs. He emphasised the strong personal relationship between Trump and Modi, highlighting the partnership’s significance beyond trade, encompassing security, technology, and energy cooperation.

Buyers are intensifying factory audits and evaluations in hubs such as Tiruppur in Tamil Nadu, with plans to start or expand sourcing from India amid supply-chain uncertainties in Bangladesh and in anticipation of lower tariffs under the FTAs, said exporters.

Canadian province’s premier David Eby, who is leading a trade mission to India from January 12-17, told ET in an interview that the province is trying to develop more opportunities with India to diversify trade, which has been hit by the US tariffs.