Suspension of Import Duty on Cotton, Implications and Solutions

Context: The government has suspended import duty on cotton in 2024–25 to address falling domestic production and rising raw material costs for the textile industry.

Suspension of Import Duty on Cotton

Current Situation (2024–25)

• Production Decline: Down to 294 lakh bales (lowest in 15 years) vs demand of 318 lakh bales.
• Imports Rising:
  • 40 lakh bales projected (highest ever).
  • Import value: $1.20 billion (107% surge from last year).
  • Key suppliers: Australia, U.S., Brazil, Egypt.

Implications of Duty Withdrawal

For Industry & Exporters (Positive)

• Imported cotton becomes cheaper → lowering raw material cost.
• Garment exporters get a level playing field in international markets.
• Beneficial during a raw material shortage.

For Farmers (Negative)

• Removal of duty may discourage cotton cultivation.
• Farmers fear lower domestic prices due to cheaper imports

Why is Cotton Production Declining in India?

• Pink Bollworm (PBW)
  • PBW is a pest whose larvae damage cotton bolls (fruits), destroying seeds and lint (cotton fibre).
  • It has developed resistance to Bt cotton (a GM variety used in India).
• No New GM Approvals 🧬
  • Existing Bt cotton (with cry1Ac and cry2Ab genes) is now ineffective.
  • New GM hybrids developed by Indian companies are stuck in regulatory trials.
  • No GM crop has been commercialised since 2006 due to opposition and long approval processes.
• Climate Change: Erratic rainfall, unseasonal rains and long dry spells affect cotton growth.
• Low Profitability: Rising input costs (seeds, fertilisers, pesticides).
• Monocropping & Poor Crop Rotation: Continuous cotton cropping without rotation → soil nutrient depletion and pest buildup.

Long-Term Solutions Suggested

• Stable Policy Framework: Suspend duty during non-peak season (April–Sept) to balance farmer & industry interests.
• Financial Support to Mills: 5% interest subvention on working capital for mills to buy cotton during peak season.
  • This reduces the government. burden on MSP operations.
• Boost Productivity: Better seeds, modern cultivation practices, and pest control to raise yields.
• Diversified Cotton Sources: Promote organic/extra-long staple cotton domestically to reduce import dependence.
• Seed Innovation: Fast-track next-gen GM/CRISPR cotton under strict biosafety + public sector R&D.
• Diversification: Encourage crop rotation (soybean, pulses) to reduce pest cycles + soil degradation.
• Water-Smart Cotton: Promote drip irrigation + organic cotton in water-stressed regions.

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