Prelims: Current events of national and international importance
Why in News?
In the wake of declining production of cotton, the Central government has recently withdrawn the 11% import duty it introduced in February 2021.
Cotton -It is the main raw material for the textile industry.
Global Rank - India is the second-largest cotton producer globally.
Cultivation Area - It boasts the largest area under cotton cultivation worldwide. It is grown by nearly six million farmers in India.
Current situation -The overall domestic cotton production is down to 294 lakh bales, the lowest in the last 15 years, against the requirement of 318 lakh bales (including non-mill use).
Cotton production in the 2024-2025 cotton season (October to September) is estimated to be nearly 20 lakh bales lesser than the last cotton season.
Imports are also likely to be highest at about 40 lakh bales, with major supplies coming from Australia, the U.S., Brazil, and Egypt.
The Cotton Corporation of India purchased nearly 100 lakh bales of cotton from farmers at Minimum Support Price (MSP) during the ongoing cotton season.
For the 2025-2026 cotton season, the government has hiked the MSP by 8%.
It is said that only about two lakh bales of imported cotton that are in transit will be available without the duty as it will reach Indian shores by September 30.
Several international brands are highlighting that cotton suppliers and garment manufacturers need to use cotton from these suppliers.
When garment exporters compete in the international market, the raw material price was higher because of the duty. They will have a level-playing field without the duty.
However, cotton farmers are not in complete agreement with these views.
Need - The industry is looking at two major support measures from the government, it wants a stable policy so that the industry can plan for raw material procurement.
The government should suspend the duty every year during the non-peak season (April to September) as the farmers would have sold majority of the produce by then.
It also wants 5% interest subvention for working capital that textile mills need to purchase cotton during the peak season.
If the mills, especially MSME units, have adequate funds, they can cover the required cotton and government need not spend on MSP operations.
