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Cotton Import Duty Withdrawal
Context:
The Central government has withdrawn the 11% import duty on cotton till September 30, 2025, to address raw material shortages in the textile industry.
Cotton in India
- India: Largest cotton producer globally.
- Cultivation: Nearly 6 million farmers
- Major cotton-growing states: Gujarat, Maharashtra, Telangana, Karnataka, Andhra Pradesh, Punjab.
- India is a leading exporter and importer of cotton simultaneously.
Import Duty on Cotton
- Introduced:Union Budget 2021, when production (350 lakh bales) exceeded domestic requirement (335 lakh bales).
- Aim: Protect farmers by discouraging cheaper imports.
- Withdrawals: Temporarily suspended earlier (April–Oct 2022), now extended again till September 30, 2025.
Implications of Duty Removal
- For textile industry/exporters:
- Level playing field in global market as raw material costs decline.
- Helps especially MSME garment units.
- For farmers:
- Discourages cultivation, as import competition suppresses domestic prices.
- Farmers’ unions (e.g., SamyuktaKisanMorcha) opposed the move.
- For policy:
- Highlights conflict between farmer protection and industry competitiveness.
Long-term Solutions Proposed
- Stable cotton import/export policy for industry.
- Seasonal duty structure: Exempt duty during non-peak season (April–September).
- Interest subvention (5%) for textile mills to procure cotton during peak season ? reduces dependence on MSP operations.
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