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India Extends Tariff Waiver for Imported Cotton, Stoking Tension Between Farmers and Exporters
Yahoo Financeยท 2025-09-17 11:00
Core Viewpoint - The recent decision to remove the 11% import duty on cotton in India has sparked mixed reactions, highlighting the tension between the textile industry and cotton farmers, with the former seeking relief from high tariffs and the latter facing economic distress due to low yields and rising production costs [1][3][5]. Group 1: Industry Impact - The removal of the import duty has led to a surge in demand for foreign cotton, providing a much-needed lifeline for exporters and mill owners facing challenges from U.S. tariffs [5][6]. - The textile sector in India has struggled to compete with neighboring countries like Bangladesh and Vietnam, which benefit from lighter duties and taxes [3]. - The U.S. accounts for 28% of India's total textile and apparel exports, valued at approximately $11 billion annually, making the textile industry highly sensitive to trade policy changes [13]. Group 2: Farmer Concerns - Cotton farmers are experiencing significant economic pressure, with yields as low as 400 kilograms per hectare compared to Brazil's 2,200 kilograms per hectare, leading to calls for higher minimum support prices (MSP) and debt waivers [1][7][14]. - The timing of the duty removal coincides with the cotton harvesting season, raising concerns among farmers about its impact on their livelihoods [8][9]. - Farmers have expressed alarm over rising production costs and stagnant yields, emphasizing that the issue is not solely about duties but about survival [7][9]. Group 3: Political and Economic Context - The political backdrop is tense, with the U.S. pressuring India to open its agricultural markets, which has fueled resentment among Indian farmers [10][11]. - Industry representatives have suggested a seasonal compromise, proposing that duties be dropped during the off-peak months to balance the needs of both farmers and the textile industry [12]. - The government faces challenges in balancing global trade pressures with domestic agricultural priorities, reflecting broader contradictions in India's economy [16][17].