India may scrap cotton import duty amid industry pressure but farmer concerns rise

The Indian government is considering scrapping the 10 per cent import duty and additional 10 per cent cess on cotton, following intense lobbying from the yarn and fabric industries. Citing a domestic shortfall and the need to boost textile exports, the industry argues that costly local cotton is undermining competitiveness. However, the move could hit farmers and the Cotton Corporation of India (CCI), which holds three-fourths of the 10 million bales it procured this season at the Minimum Support Price (MSP).

Imported cotton, if duty-free, could land at Rs 48,000-50,000 per candy, undercutting domestic rates of Rs 55,000-56,000 and causing over Rs 2,000 crore in potential losses for CCI. Farmers, who still hold 6-6.5 million bales, may suffer due to falling prices.

Although the Ministry of Textiles supports the duty cut and CCI may follow suit, farmer groups warn it could derail the government’s Cotton Mission and impact sowing decisions. India’s cotton cost is 1.5 times that of Brazil and Australia, making imports cheaper. The Cotton Association of India has lowered its production estimate to 29.53 million bales against consumption of 31.3 million. With cotton grown in 220 Lok Sabha constituencies, any decision now could trigger political backlash.