India Cotton Duty Cut Boosts Mills, Pressures Farmers

Cotton prices have already been under strain from weather-driven supply disruption and broader commodity volatility. Global benchmark pressures matter too: U.S. cotton and other agricultural commodity prices have been swinging alongside moves in energy and inflation expectations, while a stronger or weaker dollar changes the cost of imports for Indian buyers.

For textile manufacturers, the duty cut is a near-term margin positive if it translates into lower lint costs and steadier inventories. For farmers, especially in cotton-growing belts such as Tamil Nadu and Gujarat, the concern is that cheaper overseas supply will undercut domestic demand before higher productivity gains materialize.

That is why the political reaction is intensifying. Farmers are pressing for a compensating subsidy, arguing that policy should support growers as well as mills, particularly in a sector where prices, weather and policy can move earnings quickly.

The government’s next move will be closely watched by both sides of the chain. If it pairs the duty removal with farm support or productivity measures, it could blunt the backlash; if not, the risk is a sharper income hit for growers and a fresh round of lobbying from the textile industry as India balances food and fibre inflation, export competitiveness and rural stress.