The Indian government's decision to temporarily exempt an 11% import duty on raw cotton has led to a dramatic surge in imports from the United States, significantly impacting domestic market prices. The move, effective from August 19, 2025, has been met with concern from farmer organizations who view it, coupled with limited government procurement, as a double blow to cotton growers.
Sharp Rise in Imports and Price Softening
Official data reveals a staggering increase in cotton imports following the duty exemption. Imports rose from 15.20 lakh bales in the 2023-24 season to 41.40 lakh bales in 2024-25, marking an increase of over 172%. This influx directly influenced domestic prices, which softened from approximately Rs 57,000 per candy (where 1 candy equals 227 kg) to around Rs 52,500 per candy.
In a written reply in the Rajya Sabha on Friday, Union Minister of State for Textiles, Pabitra Margherita, confirmed the trend. He stated that since the exemption, prices have softened further and are currently ranging between Rs 51,500 and Rs 52,500 per candy. The minister attributed domestic price movements to global and domestic demand-supply conditions, exchange rates, and quality considerations.
CCI Procurement Dips, Private Traders Dominate
Concurrent with the import surge, the procurement activity of the Cotton Corporation of India (CCI) under the Minimum Support Price (MSP) scheme has seen a notable decline in the current season. The procurement season starts on October 1 each year.
As per the government's data:
- For the 2024-25 season, CCI purchased 100 lakh bales out of a production of 297 lakh bales, accounting for 33.70% of the produce.
- In the 2023-24 season, CCI bought only 32.84 lakh bales from a total production of 325 lakh bales, which is just 10.10%.
- For the current 2025-26 season (till December 8, 2025), CCI's purchases have been even lower. Out of a production of 292 lakh bales, only 24.92 lakh bales (8.53%) were procured in over two months.
The scenario in Punjab is particularly telling. Until December 1, 2025, total purchases stood at 2,30,423 quintals. Out of this, CCI purchased only 35,348 quintals (15.34%), while private traders bought a dominant 195,075 quintals (84.66%). Alarmingly, out of the total 230,423 quintals, 140,446 quintals (60.95%) were purchased below the MSP, forcing farmers into distress sales.
Government's Stance and Industry Rationale
The government has defended the import duty exemption, stating that the increased imports are necessary to meet the quality and supply requirements of the domestic textile industry. The industry consumes about 94% of India's cotton. Imports, which constituted about 13.93% of total domestic consumption in 2024-25, help bridge the demand-supply gap.
Specifically, cotton imports from the US increased to ensure the availability of specialised cotton varieties that support export-oriented production, thereby enhancing the global competitiveness of India's textile sector. The CCI, for its part, had made no purchases in the 2021-22 and 2022-23 seasons as market prices remained above the MSP.
As of December 11, 2025, the Cotton Corporation of India has procured about 31.19 lakh bales worth Rs 13,492 crore under MSP operations through 570 procurement centres across 149 districts in 11 states, including Punjab.
The policy shift has sparked political debate. Rajya Sabha member Randeep Singh Surjewala questioned the government on whether it has acknowledged that scrapping the duty reduced domestic prices, what assistance has been provided to affected farmers, and sought details on import increases and CCI procurement over five years. The situation continues to develop, with farmers' groups and industry stakeholders watching closely for the government's next move.
