The Indian government may scrap the 10% import duty and the additional 10% cess on cotton, owing to pressure from the cotton industry. The industry is pushing for the removal of import duties to boost textile exports, citing a domestic shortage of cotton. However, this move could hurt farmers.
If import duty is removed, cheaper imported cotton may lead to a drop in domestic prices. This would affect not just farmers, but also the Cotton Corporation of India (CCI), the government agency authorised to procure cotton at the Minimum Support Price (MSP), as it currently holds about three-fourths of the 10 million bales it procured this season.
Sources indicate that the Ministry of Textiles supports removing the import duty, and the CCI is also likely to agree. The yarn and fabric industries are actively lobbying for this. Currently, a 10% basic customs duty and a 10% cess make the effective import duty 11%.
CCI CMD Lalit Kumar Gupta told Rural Voice that India imports 1 to 1.5 million bales of specific high-quality cotton annually, which isn’t produced domestically and hence isn’t affected by customs duties. Recently, the government convened a meeting of the Committee on Cotton Production and Consumption (COCPC) to deliberate the issue, where most participants supported removing the duty. Some raised concerns that doing so could lead to a fall in prices of unsold cotton held by farmers.
When asked for CCI’s view, Gupta said the agency will support whatever decision the government takes. As for farmers, he emphasized that their interests are protected through the MSP. While he acknowledged that falling prices could cause losses, he said CCI sells cotton year-round, sometimes fetching better prices later in the season when supply tightens. If losses do occur, the government compensates the CCI.
Gupta noted that the yarn and fabric industries believe government intervention should be minimal. Interestingly, no other country currently imposes import duties on cotton, unlike India, which introduced them in 2022. He stated that CCI is currently selling cotton at Rs 55,000–56,000 per candy (about 356 kg). In the 2024–25 season, CCI procured 10 million bales (170 kg each), of which about 25% has been sold.
The MSP-based cotton procurement season is now over. Around two-thirds of the crop is either still with farmers or has been sold to traders. Industry sources estimate that farmers hold 6–6.5 million bales. If the duty is removed, imported cotton could land at Rs 48,000–50,000 per candy, undercutting CCI’s domestic prices and possibly causing over Rs 2,000 crore in losses on unsold stock.
The Cotton Association of India (CAI) had initially estimated 2024–25 cotton production at 30.22 million bales, but revised this to 29.53 million bales in March 2025. It pegs current year consumption at 31.3 million bales. Meanwhile, the government's second advance estimate (March 11, 2025) places production at 29.42 million bales, down from the 29.92 million projected in the first advance estimate in November 2024.
India’s cotton production cost is about 1.5 times higher than in Brazil or Australia, allowing those countries to export cotton to India at lower prices. The yarn and fabric industry argues that expensive domestic cotton makes Indian textile exports uncompetitive. However, they already have the option to import duty-free cotton under the advance licensing scheme, which weakens their argument.
If the government scraps import duties now, it could discourage farmers just as the sowing season begins. This would undermine the Cotton Mission announced in this year’s budget, aimed at boosting domestic production. Cheaper imports could not only harm farmers but also derail government objectives. The issue could also turn political, as farmer groups may protest. Notably, cotton is grown in around 220 Lok Sabha constituencies, making this a politically sensitive matter.