Start of MSP Cotton Procurement Marks Good News, But Farmers Face Setbacks
India's cotton imports are expected to increase by 9.8 percent in the new season, reaching an all-time high. This is certainly a shock for Indian farmers. This is because one of the reasons behind this is the duty-free imports approved by the Indian government a few months ago. This information comes at a time when the cotton procurement season has begun in the country, while farmers have been devastated by excessive monsoon rains and subsequent unseasonal rains. In such a situation, the increase in imports will undoubtedly harm them.
Imports Continuously Rising
According to news agency Reuters, there are two reasons behind the increase in cotton imports in India: first, the approval of duty-free imports from India, and second, domestic production reaching a 17-year low. India is the world's second-largest cotton producer. In such a situation, while India's increased imports are expected to support cotton prices in the global market, there is a strong possibility that it will also harm the country's farmers. Currently, cotton prices in the international market are near a six-month low.
News agency Reuters quoted Atul Ganatra, President of the Cotton Association of India (CAI), as saying that India's cotton imports could reach 4.5 million bales in the 2025/26 marketing year, which began on October 1. This number could reach 3 million bales in December alone. Last year, India's cotton imports from the US, Brazil, Australia, and African countries reached a record 4.1 million bales.
Duty-free imports and weak production
Cotton Association of India President Atul Ganatra said, "At present, cotton prices abroad are much cheaper than in the domestic market, so textile mills are rapidly importing before the end of December." The Indian government has extended the 11% import duty exemption on cotton imports until December 31. A New Delhi-based trader associated with a global trade house reported that textile mills are turning to better-quality imported cotton due to growing concerns about domestic supply due to crop damage.
Heavy and untimely rains in October in the western states of Maharashtra and Gujarat, as well as the southern states of Andhra Pradesh and Telangana, damaged cotton crops ready for harvest. These states account for more than 70% of India's total cotton production.
Largest Employment Sector
According to estimates by the Cotton Association of India (CAI), India's cotton production could decline by 2.4% compared to the previous year to 30.5 million bales in 2025-26. This would be the lowest production since 2008-09. Some traders estimate that production could fall further to 28 million bales. The textile industry is one of India's largest employers, directly employing over 45 million people. According to the CAI, cotton consumption is expected to decline by 4.5 percent in 2025-26, falling to 30 million bales due to weak export demand.
Atul Ganatra said, "The US has imposed heavy tariffs, which has led to a decline in demand from there, forcing many textile units in South India to cut production." The US buys approximately 29 percent of India's annual textile exports of $38 billion. Since August, it has doubled the tariff on imports from India to 50 percent.
READ MORE :- Haryana: Cotton purchased at MSP, but prices reduced citing low quality.
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