Cotton import duty cuts

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Event/Issue: Removal of 11% import duty on cotton by the Indian government has triggered protests from farmers while being welcomed by the textile industry.
Background/Context: India is a major global cotton producer and exporter, but rising global cotton supply, falling prices, and structural inefficiencies in the domestic cotton supply chain are creating price-parity challenges.
Fact/Data: Cotton imports in 2024-25 jumped 77% to 5.25 lakh tonnes despite the import duty.

Relevance : GS-III (Agriculture, Textile Industry, Trade Policy, Rural Livelihoods).

Government lifted import duty on cotton, ostensibly to ease costs for the textile industry amid global trade pressures and high tariffs (e.g., 50% US tariffs on Indian apparel).
Farmers oppose the move, arguing it lowers domestic prices and threatens livelihoods.
The issue highlights structural weaknesses in Indian cotton R&D, productivity, and farm-to-firm linkages.

Cotton is a critical raw material for India’s textile sector, one of the largest employers, especially of women.
Price declines affect farmers’ incomes; job losses in textile manufacturing impact rural and urban livelihoods.
Policy decision reflects tension between farmer welfare and industrial competitiveness.

Polity/Legal: Balancing MSP, domestic procurement policies (Cotton Corporation of India), and trade liberalisation; political backlash from farmer unions.
Governance/Administrative: Supply chain inefficiencies in farm-to-firm linkages; CCI procured 34% of production, signalling market distortions.
Economy: Rising global supply lowers cotton prices; domestic costs are higher due to declining productivity, weak cotton-to-lint ratio, and high input costs; textile exporters face global tariff pressures.
Society: Declining prices reduce farmer income, prompting crop shifts from cotton to paddy, soyabean, or groundnut. Job losses in women-dominated garment sector due to global supply chain adjustments.
Environment/Science & Tech: Stagnant productivity; Bt cotton covers 95% of acreage but faces pest resistance; India lags in adoption of advanced technologies like Bollgard-III and CRISPR-based varieties.
International: India’s cotton trade integrated with global markets; US tariffs, global price trends, and competition from Brazil, China, and Australia influence policy decisions.

Domestic cotton prices remain higher than global prices, causing import dependence.
Declining acreage and productivity, with crop shifts reducing supply.
Technological stagnation: Bt cotton over two decades old, leading to pest resistance.
Weak public investment in R&D, lagging behind global competitors.
Balancing farmer welfare and industrial competitiveness amid global trade dynamics.

Increase public investment in cotton R&D focusing on high-yield, pest-resistant, climate-resilient varieties.
Strengthen farm-to-firm linkages to improve supply chain efficiency and reduce costs.
Encourage adoption of advanced biotechnology (Bollgard-III, CRISPR) in collaboration with private and international partners.
Rationalise MSP and procurement policies to protect farmers while ensuring competitive domestic cotton for industry.
Promote sustainable cotton cultivation practices to improve productivity and reduce input costs.

India’s cotton sector faces the dual challenge of global market pressures and domestic structural inefficiencies. Policy interventions must balance farmer welfare, industrial competitiveness, and technological upgrading to ensure long-term sustainability and resilience.