A day after the United States imposed a 50% tariff on imports from India, the Government of India announced the extension of duty-free cotton imports until December 31, 2025, to support textile exporters. The move is aimed at ensuring cheaper cotton supplies for the textile industry, but it may come at the expense of India’s cotton farmers. Earlier, the government had allowed duty-free cotton imports only until September 30, 2025, arguing that the new cotton marketing season would begin in October, and extending imports beyond that could adversely affect farmers when their produce entered the market.
Until August 18, cotton imports attracted an 11% levy, comprising 10% import duty and a 10% agriculture infrastructure cess on top of it. Surprisingly, within just 10 days of issuing the first notification on August 18, the government reversed its own reasoning. Within two days of the duty-free import announcement, the Cotton Corporation of India (CCI) slashed cotton prices by ₹1,100 per candy.
According to industry sources, before the duty waiver, CCI was selling cotton at ₹56,000–57,000 per candy, but prices were reduced by ₹1,100 within two days. At current international prices, imported cotton costs around ₹51,000 per candy. Clearly, importers who were hesitant to place orders during the earlier 40-day duty-free window will now be able to import large quantities until December 31, 2025. This is bound to impact domestic cotton prices.
Farmers are expected to bear the brunt of this decision, as out of the around 30 million bales produced annually, CCI buys only about 10 million bales. The rest depends on open market sales. Unless CCI purchases the entire 30 million bales at the Minimum Support Price (MSP), farmers may struggle to get MSP. In the new season, CCI will have to buy cotton at ₹61,000 per candy under MSP, while imported cotton is landing at about ₹51,000 per candy. This price gap means market rates will remain below MSP. If the price difference persists at ₹10,000 per candy across total procurement, both CCI and farmers could collectively suffer losses of nearly ₹15,000 crore.
Following the “Trump Tariffs,” India’s textile exports to the US, worth nearly $8 billion, face a potential setback. A cotton industry expert told Rural Voice that the government’s strategy of extending duty-free imports until December 31 to support exporters is flawed. A better approach would have been to balance the interests of both exporters and farmers, perhaps by providing direct export incentives. Textile exporters already faced only about 3% effective duty on cotton imports. Allowing duty-free imports during the crucial marketing season, when domestic cotton arrives in the market, will severely impact farmers. While the move is being justified as a measure to help exporters, domestic textile industries also stand to benefit—at the cost of farmers.
Interestingly, India’s bilateral trade talks with the US have long been stuck on the issue of opening domestic markets for agricultural products. India has consistently maintained it cannot compromise on the interests of farmers, the dairy sector, and fishermen. Yet, the decision to extend duty-free cotton imports until December 31, 2025, will add to farmers’ challenges.
India’s cotton production has already been declining for years, falling from 39.9 million bales to about 30 million bales, against a domestic textile demand of 31.5 million bales. Once a major exporter, India has now become a net importer of cotton. In the current kharif season, the area under cotton cultivation has reduced by around 300,000 hectares, due to poor seed quality and pest attacks. If farmers fail to get remunerative prices, many may shift to alternative crops, which could spell further trouble for the cotton industry. With the Prime Minister emphasizing “Swadeshi” (self-reliance), this decision on duty-free imports sends a contrary signal to farmers.
The government may also face political backlash, as major farmers’ unions had already warned against duty-free cotton imports, even threatening protests if needed. Those statements were made when imports were permitted until September 30, 2025. Now that the exemption has been extended until December 31, opposition is likely to intensify.