{"id":60877,"date":"2025-08-27T11:01:07","date_gmt":"2025-08-27T05:31:07","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=60877"},"modified":"2025-08-27T11:01:07","modified_gmt":"2025-08-27T05:31:07","slug":"india-suspends-cotton-import-duty-amid-production-decline","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/india-suspends-cotton-import-duty-amid-production-decline\/","title":{"rendered":"India Suspends Cotton Import Duty Amid Production Decline"},"content":{"rendered":"<h2><b>Cotton Import Duty Suspension India Latest News<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Cotton, the key raw material for India\u2019s textile industry and grown by nearly <\/span><b>six million farmers<\/b><span style=\"font-weight: 400;\">, has seen a decline in domestic production.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">To address this, the Centre has <\/span><b>withdrawn the 11% import duty<\/b><span style=\"font-weight: 400;\">\u2014first imposed in February 2021\u2014until <\/span><b>September 30<\/b><span style=\"font-weight: 400;\">, when the current cotton season ends.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The move follows a steep rise in cotton imports last year, despite the duty being in place.<\/span><\/li>\n<\/ul>\n<h2><b>Introduction and Withdrawal of Cotton Import Duty<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The import duty was announced in the 2021 Budget, when the country was producing 350 lakh bales of cotton annually against the requirement of 335 lakh bales.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">While the country was exporting cotton, there were imports too and the duty was aimed at protecting the interest of cotton growers.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However, as the textile industry later faced a raw material shortage, the government exempted all varieties of cotton from the duty between April\u2013September 2022, later extending it to October 2022.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">According to the Global Trade Research Initiative, cotton imports surged 107.4%, rising from $579.2 million in FY2023-2024 to $1.20 billion in FY2024-2025.<\/span><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<h2><b>Implications of Cotton Import Duty Withdrawal<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">With this, the government has scrapped both the <\/span><b>5% basic customs duty<\/b><span style=\"font-weight: 400;\"> and the <\/span><b>5% agriculture cess<\/b><span style=\"font-weight: 400;\"> on cotton, enabling mills to <\/span><b>source raw material at lower costs<\/b><span style=\"font-weight: 400;\">.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This move is expected to <\/span><b>cool domestic cotton prices<\/b><span style=\"font-weight: 400;\">, benefitting everything from <\/span><b>T-shirts to handloom sarees<\/b><span style=\"font-weight: 400;\">, and provide relief to <\/span><b>SMEs in the textile sector<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The decision comes as <\/span><b>Indian apparel exporters face steep global competition<\/b><span style=\"font-weight: 400;\">, burdened by nearly <\/span><b>60% tariffs in the US<\/b><span style=\"font-weight: 400;\"> (compared to Bangladesh and Vietnam at 20%).\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Rising cotton prices at home had further strained the industry, making the exemption a step taken in the <\/span><b>\u201cpublic interest\u201d<\/b><span style=\"font-weight: 400;\">.<\/span><\/li>\n<\/ul>\n<h3><b>Implications<\/b><\/h3>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The withdrawal of cotton import duty will mainly benefit garment exporters, as around two lakh bales in transit will now enter duty-free.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">This will give them a level-playing field internationally where high raw material costs earlier hampered competitiveness.\u00a0<\/span>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"2\"><span style=\"font-weight: 400;\">Several global brands also expect Indian suppliers to use this imported cotton.<\/span><\/li>\n<\/ul>\n<\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">However, farmers have voiced concerns, arguing that the move discourages cotton cultivation.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Without adequate government support, they feel the decision undermines their interests, even as exporters and manufacturers stand to gain.<\/span><\/li>\n<\/ul>\n<h2><b>Current Status of Cotton Production and Imports in India<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">India\u2019s <\/span><b>domestic cotton production<\/b><span style=\"font-weight: 400;\"> has fallen to <\/span><b>294 lakh bales<\/b><span style=\"font-weight: 400;\"> in 2024-25, the lowest in 15 years, against a requirement of 318 lakh bales (including non-mill use).\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Output this season is projected to be 20 lakh bales lower than last year.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">To bridge the gap, imports may touch 40 lakh bales, mainly from <\/span><b>Australia<\/b><span style=\"font-weight: 400;\"> ($258.2 million), <\/span><b>the U.S.<\/b><span style=\"font-weight: 400;\"> ($234.1 million), <\/span><b>Brazil<\/b><span style=\"font-weight: 400;\"> ($180.8 million), and <\/span><b>Egypt<\/b><span style=\"font-weight: 400;\"> ($116.3 million).<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Meanwhile, the Cotton Corporation of India (CCI) procured around 100 lakh bales at MSP, spending \u20b937,500 crore, and has already sold 73 lakh bales in the market.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">For the 2025-26 season starting October 1, the government has announced an 8% hike in MSP, with fresh supplies expected from northern States in October and central and western States after Deepavali.<\/span><\/li>\n<\/ul>\n<h2><b>Long-Term Solutions for Cotton Sector<\/b><\/h2>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The textile industry seeks <\/span><b>policy stability<\/b><span style=\"font-weight: 400;\"> in cotton procurement.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">It suggests the government <\/span><b>suspend import duty during the non-peak season (April\u2013September)<\/b><span style=\"font-weight: 400;\">, after farmers sell most of their produce, ensuring mills access affordable raw material without affecting growers.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Additionally, the industry has asked for a <\/span><b>5% interest subvention on working capital<\/b><span style=\"font-weight: 400;\"> to help mills, especially <\/span><b>MSMEs<\/b><span style=\"font-weight: 400;\">, purchase cotton during the peak season.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">With sufficient funds, mills could cover their cotton needs, reducing dependence on costly <\/span><b>MSP operations<\/b><span style=\"font-weight: 400;\"> by the government.<\/span><\/li>\n<\/ul>\n<p><b>Source:<\/b> <a href=\"https:\/\/www.thehindu.com\/business\/Economy\/why-has-the-import-duty-on-cotton-been-suspended-explained\/article69980767.ece#:~:text=In%20the%20wake%20of%20declining,with%20the%20duty%20in%20place.\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">TH<\/span><\/a><span style=\"font-weight: 400;\"> | <\/span><a href=\"https:\/\/www.pib.gov.in\/PressReleasePage.aspx?PRID=2158055\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">PIB<\/span><\/a><span style=\"font-weight: 400;\"> | <\/span><a href=\"https:\/\/timesofindia.indiatimes.com\/life-style\/fashion\/buzz\/india-cuts-import-duty-on-cotton-what-it-means-for-the-fashion-industry\/articleshowprint\/123405786.cms\" target=\"_blank\" rel=\"nofollow noopener\"><span style=\"font-weight: 400;\">ToI<\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The government suspends 11% cotton import duty till September 2025 to support textile mills as production falls to a 15-year low.<\/p>\n","protected":false},"author":18,"featured_media":60901,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[18],"tags":[2352,60,22,59],"class_list":{"0":"post-60877","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-mains-current-affairs","8":"tag-cotton-import-duty-suspension-india","9":"tag-mains-articles","10":"tag-upsc-current-affairs","11":"tag-upsc-mains-current-affairs","12":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/60877","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/18"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=60877"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/60877\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/60901"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=60877"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=60877"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=60877"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}