Amid Trump's tariffs, Centre to hike MSP cotton procurement to protect farmers
The Centre will hike cotton procurement at the federally determined minimum support price or MSP to protect farmers from falling local prices, following the government's decision to waive duty on fibre imports and shore up the garment sector facing Trump's 50% tariff.
Farmers are already grappling with price pressures as textile manufacturers prefer to import cheaper short-staple fibres due to high domestic rates. The textile industry, one of the country's largest employers, had itself been pleading with the central government for duty relief due to falling margins and the impact of the pandemic.
To support the labour-intensive garment industry on the one hand and cotton growers on the other, the Centre has directed state-run Cotton Corporation of India (CCI) to be ready for large procurement and buy as much quantity of produce as producers bring to its procurement centres, an official said. Whenever market prices fall, farmers depend on CCI for minimum prices.
On August 28, India extended the 11% import duty exemption on cotton imports, including agricultural cess, till the end of December. The tax exemption was initially applicable between August 19 and September 31.
By temporarily halting taxes, the government aims to stabilise inflation in products such as ready-made garments, ease raw material crisis and protect small and medium enterprises, an official said in a statement on August 19.
"We are ready to buy as much as farmers want and CCI is there to help cotton growers," said CCI Managing Director Lalit Kumar Gupta.
For the 2025-26 season, the Centre has fixed the MSP for the popular medium-staple cotton at ₹7,710 per quintal (100 kg), up by ₹589 over the previous year. Importers say the cost of fibre imported from abroad is between ₹5000-6200 per 100 kg.
Global garment buyers have cut new imports from India following Trump's hefty tariffs and analysts say companies may turn to Bangladesh or China, where tariffs are lower. CCI is expanding its buying power centres to over 500.
read more:- Removing cotton import duty to bridge quality and supply gap
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