Centre's Cotton Import Duty Removal Has Caused Textile Industry Relief But Put Farmers In Despair

The Indian government's decision to waive the 11 per cent import duty on cotton—initially announced for 42 days from August 19 to September 30, 2025 and subsequently extended until December 31—has created a sharp divide between India's textile industry and its cotton farmers. Whilst the move aims to bolster textile exports amidst rising US tariffs, it threatens to undermine the livelihoods of approximately 60 lakh cotton farmers already grappling with mounting debts and inadequate minimum support prices.

The Central Board of Indirect Taxes and Customs removed both the basic customs duty and the Agriculture Infrastructure and Development Cess on cotton imports, providing immediate relief to an industry strangled by a 50 per cent U.S. tariff—significantly higher than the 20 per cent faced by Bangladesh and Vietnam. India has set an ambitious $100 billion textile export target by 2030, but American retail giants, including Walmart, Target, Amazon, and H&M, have asked suppliers to hold consignments until tariff clarity emerges.

Rajesh Malhotra, spokesperson for the Northern India Mills' Association, expressed cautious optimism: "This duty exemption gives our mills breathing room to compete globally. Without access to competitively priced raw materials, we simply cannot match the pricing advantages our regional competitors enjoy in Western markets." The policy enables cheaper imports from the United States, Brazil, and Australia, reducing input costs across the textile value chain.

The ramifications of this will be double-edged, as seen before. The central government has tried this same policy beforehand as well, causing raw cotton prices to dip: a boon for textile brands to increase production, but a major loss for farmers, causing a supply chain lacuna.

Fields of Financial Ruin

For cotton farmers, however, the policy represents a devastating blow. Prakash Patil, a 28-year-old from Kolhapur, Maharashtra, has been forced to work as a security guard in Pune while offering his two-acre plot to another villager for cultivation. "We get decent harvests, but fair prices remain a dream. Every time the government changes import or export rules, it's our incomes that suffer. We can't even recover what we spend on seeds and fertiliser," Patil explained.

Anurag Mukherjee, a Delhi-based agricultural economist, warns, "Large-scale cotton imports at cheaper rates will devastate domestic prices, leaving farmers unable to secure remunerative returns. Textile manufacturers will naturally gravitate towards lower-cost imports. The industry prospers whilst farmers descend further into indebtedness."

The statistics are grim. Between January and March 2025 alone, 269 farmers in Marathwada died by suicide. The Sanyukta Kisan Morcha estimates that nearly 60 lakh cotton farmers have suffered losses of Rs. 18,850 crore by being denied a profitable MSP of Rs. 10,075 per quintal based on the Swaminathan Commission's formula.

Cotton farmers face spiralling costs—picking charges have doubled to Rs. 8-9 per kilo, whilst GST has inflated input prices. Yields have dropped to 8-9 quintals per acre, leaving farmers like Patil earning merely Rs. 7,000 monthly after a year's work. "Banks barely give us Rs. 20,000 to 30,000 for crop loans. We're forced to borrow from moneylenders at rates of five per cent or even higher," he said.

Burning Notifications, Building Resistance

The All India Kisan Sabha and Sanyukta Kisan Morcha have mounted fierce resistance. A spokesperson of the AIKS under anonymity spoke to Local Samosa and highlighted the inclination for corporates behind these decisions. "Even after massive protests from cotton-growing states, the finance ministry pushed through the extension until year-end. Under the guise of helping exports, the government is enabling big textile corporations to profit at the expense of struggling farmers. For years, we've been told to trust government procurement. But the Cotton Corporation buys barely a fraction of our produce—less than 13 per cent over the past 11 years. The rest we must sell at a loss. Now with duty-free imports, even that small market will vanish."

They also recommend an alternative: "Rather than opening floodgates to cheap imports, the government should provide subsidised domestic cotton to small and medium textile enterprises. This would support both handloom and powerloom sectors, strengthen export competitiveness, and boost domestic markets without sacrificing farmers."

As harvest season approaches, the tension between industrial competitiveness and agricultural sustainability remains unresolved. While textile exporters celebrate temporary relief, cotton farmers face an uncertain future—trapped between rising costs, inadequate support prices, and cheap imports flooding domestic markets. 

Are you a founder or entrepreneur ready to spotlight your homegrown brand? Nominate them now for Local Samosa’s third edition of Brands to Watch Out For in 2026 Now!