India’s cotton value chain is witnessing a sharp policy divide, with calls from textile manufacturers to reduce import duties clashing with concerns over potential adverse impacts on farmers and the domestic procurement system.

The debate centres on the current import duty of around 11% on cotton, reinstated from January 2026, which spinning mills and apparel exporters argue has exacerbated cost pressures amid a recent surge in domestic prices.

Industry stakeholders, including millers and garment exporters, have been urging the government to consider reducing or eliminating the duty to ensure raw material availability and maintain export competitiveness. However, sections of the trade have cautioned that such a move could destabilise farm incomes, particularly at a critical juncture ahead of the kharif sowing season.

Market participants indicated that a duty cut could trigger a sharp rise in imports, potentially leading to a repeat of earlier cycles when large volumes of inbound cotton depressed domestic prices. According to trade sources, this could force farmers to sell below minimum support price (MSP) levels, especially those currently holding stocks in anticipation of improved realisations.

Estimates suggest that growers are holding approximately 4 million bales of cotton, reflecting expectations of firmer prices. A sudden influx of cheaper imports, if duties are reduced, could undermine these expectations and lead to distress selling.

Concerns have also been raised regarding the financial implications for the Cotton Corporation of India (CCI), the government’s nodal procurement agency. Industry observers noted that increased imports during periods of high domestic procurement could result in inventory losses for the agency, particularly if market prices soften.

Government officials have indicated that the matter is under active consideration, with relevant ministries evaluating the feasibility of a duty reduction or removal. No final decision has yet been announced.