COTTON IMPORTS: ECONOMY

COTTON IMPORTS: ECONOMY

NEWS: Cotton imports increase despite pressure on Indian cotton prices

WHAT’S IN THE NEWS?

India's cotton imports have surged due to declining domestic yields and low international prices, prompting the introduction of the Cotton Mission in the Union Budget 2024 to improve productivity and boost the textile industry's competitiveness. The mission aims to enhance cotton yields and promote Extra-Long Staple varieties while reducing import dependence.

Rising Cotton Imports:

  • India has seen a significant rise in cotton imports over the past seven months, reflecting an increasing dependency on foreign markets due to declining domestic yields and competitive international prices.
  • In January 2025, cotton imports were valued at $184.64 million, a sharp increase from $19.62 million in January 2024, highlighting the growing reliance on imports.

Cotton as a Crop:

  • Cotton is a kharif crop that requires 6 to 8 months to mature, with the sowing and harvesting times varying across regions depending on climatic conditions.
  • Cotton is primarily a tropical and sub-tropical crop, requiring high temperatures between 21°C and 30°C. Its growth is hindered when temperatures drop below 20°C.
  • The crop is drought-resistant and is ideally suited for arid climates. It requires an annual rainfall of 50-100 cm for optimal growth.
  • Cotton requires at least 210 frost-free days annually to grow effectively.
  • Despite occupying just 2.1% of the world’s arable land, cotton contributes to 27% of global textile needs. In addition to its fiber, cotton seeds are also used to produce edible oil and animal feed.
  • India is the second-largest producer of cotton globally, following China.

Cotton Corporation of India (CCI):

  • The Cotton Corporation of India (CCI) was established in 1970 under the Companies Act 1956.
  • CCI is a government-owned corporate agency, responsible for trade, procurement, and export of cotton.
  • CCI operates under the Textile Policy of 1985 issued by the Ministry of Textiles, Government of India.
  • The corporation functions in several states, including Punjab, Haryana, Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, Andhra Pradesh, Karnataka, Tamil Nadu, and Odisha.
  • One of the main roles of CCI is to conduct price support operations when market prices fall below the minimum support price (MSP).

Challenges Faced by Indian Cotton Farmers:

  • Low Productivity: Indian cotton farmers face low productivity, with an average yield of about 450 kg per hectare, which is significantly lower than countries like Brazil, where productivity ranges from 1,800-2,000 kg per hectare.
  • Declining Prices and Financial Losses: Farmers are struggling with financial losses, as the cost of production per quintal is ₹9,000, while the Minimum Support Price (MSP) stands at ₹7,235, leading to a significant gap.
  • Weak International Prices: The global cotton market continues to face low prices, which makes imports more attractive for mills than purchasing cotton from domestic sources.

Government Initiatives:

  • Cotton Mission under Union Budget 2024:
  • The Cotton Mission, introduced in the Union Budget 2024, aims to improve cotton productivity through research, better farming techniques, and the introduction of high-yielding varieties.
  • The mission spans five years, with an allocation of ₹600 crore.
  • The target is to increase cotton yield from the current 450-500 kg per hectare to 1,000 kg per hectare.
  • Promoting Extra-Long Staple (ELS) Varieties:
  • The mission focuses on cultivating Extra-Long Staple (ELS) cotton to reduce India's import dependence and strengthen the domestic textile industry.
  • Alignment with 5F Vision:
  • The Cotton Mission aligns with the 5F Vision framework, which integrates "Farm to Fibre, Fibre to Factory, Factory to Fashion, Fashion to Foreign," aiming to strengthen the entire cotton value chain in India.
  • Procurement by Cotton Corporation of India (CCI):
  • CCI has already procured nearly 100 lakh bales since the new cotton season began on October 1, 2024.
  • ELS cotton has now been allowed for duty-free imports, benefiting exporters and the overall textile industry.
  • Advance Authorisation Scheme:
  • The Advance Authorisation Scheme enables duty-free cotton imports for exporters, helping India's textile industry maintain its global competitiveness and sustain its market position internationally.

Source: https://www.thehindu.com/business/Industry/cotton-imports-increase-despite-pressure-on-indian-cotton-prices/article69307064.ece