India has made a significant decision regarding its cotton imports. The government has waived the 11% import duty on cotton until December 31, 2025. This move aims to support the Indian textile industry, which is facing challenges due to lower domestic cotton production.
Domestic cotton output has been on a decline. For the 2024-25 marketing year (October to September), production is estimated to be 311.4 lakh bales. This is a drop from 336.5 lakh bales in the previous year and significantly lower than the all-time high of 398 lakh bales recorded in 2013-14. Factors contributing to this decrease include a 2.6% reduction in the area planted with cotton during the recent kharif season.
However, the decision to remove import duties is not solely based on domestic production figures. It also carries strategic importance in India’s relationship with the United States. US cotton exports have seen a substantial fall, dropping from $8.82 billion in 2022 to $4.96 billion in 2024. A major reason for this decline is reduced buying by China, which has cut its imports from the US significantly. With China further slashing its purchases, the US is looking for new markets.
Several countries, including Vietnam, Pakistan, Turkey, and India, have increased their cotton imports from the US. In the first half of 2025, India’s imports of US cotton rose to $181.5 million, more than double the $86.9 million imported in the same period of 2024. The zero-duty policy is expected to further boost these imports.
The US Department of Agriculture has welcomed this move, seeing it as an opportunity to increase US cotton sales. They also believe it will help Indian textile exporters access cheaper and cleaner cotton. Reports suggest that almost 95% of US cotton imported into India is processed and then re-exported as yarn, fabric, and apparel.
Beyond trade, the decision also holds diplomatic significance. In the context of India-US relations, this move signals India’s willingness to negotiate and find common ground. While trade talks between the two nations have been stalled, this gesture could encourage reciprocal action from the US. It is suggested that the US could reciprocate by reconsidering its 25% “penalty” on Russian oil imports by India, a move viewed as unreasonable by some.
However, there is a downside to this policy for Indian cotton farmers. They have not seen significant new cropping technology since the introduction of genetically modified Bt cotton hybrids. These hybrids had previously boosted average lint yields considerably, from 302 kg to 566 kg per hectare between 2002-03 and 2013-14. Since then, yields have stagnated and even fallen to below 450 kg per hectare. Furthermore, Indian cotton crops have become more vulnerable to secondary pests like the pink bollworm and whitefly, as well as fungal diseases.
The lack of investment in cotton breeding and research is evident in the projected record imports of 39 lakh bales for 2024-25. This situation, where farmers face technological stagnation while imports increase, is similar to what has been observed in other crops like mustard and soybean. While the Indian farmer is capable of competing, they need to be supported with the right technology and policies to do so effectively.