Cotton Economy of India

GS 3 – Economy

Context
  • Ministry of Textiles under the Azadi Ka Amrit Mahotsav initiative has extended the import duty exemption on cotton till 31st Dec 2025.
Cotton – Importance
  • “White Gold”: Major commercial crop of India.
  • Provides livelihood to 6 million farmers and supports the textile–apparel value chain employing 45+ million people.
  • India = largest producer of cotton globally (~23% of world output).
Geographical Distribution
  • Grown mainly in black cotton soil (regur) of Deccan Plateau.
  • Major states (≈95% area):
    • Gujarat (largest producer)
    • Maharashtra
    • Telangana
    • Andhra Pradesh
    • Punjab, Haryana, Rajasthan (North-west irrigated belt)
    • Karnataka, Madhya Pradesh, Tamil Nadu (smaller shares)
Climatic Requirements
  • Kharif crop – sown in April–May, harvested Oct–Jan.
  • Requires:
    • Temperature: 21°C – 30°C
    • Rainfall: 50–100 cm (but needs clear sunny days during maturity)
    • Irrigation crucial in north-west India.
Production Trends
  • India’s share: ~23% of global cotton production.
  • Area under cotton: ~12–13 million hectares.
  • Bt Cotton: Introduced 2002 → now >90% area under Bt variety.
  • Productivity remains lower than global average despite being top producer.
Trade & Exports
  • Cotton textiles = 33% of India’s textile exports (~USD 7–8 billion annually).
  • Major export destinations: USA, EU, Bangladesh, Vietnam, China.
  • India also exports raw cotton but high-value exports (yarn, fabric, garments) are strategically important.
Policy & Institutional Support
  1. Minimum Support Price (MSP):
    • Cotton Corporation of India (CCI) procures at MSP.
    • MSP fixed at least 50% above cost of production (per Swaminathan formula).
  2. Schemes:
    • Technology Mission on Cotton (TMC): quality improvement.
    • Cotton Technology Mission Phase II: Ginning & pressing modernisation.
    • PM MITRA Parks (2021): world-class textile parks.
    • Duty-free imports (till Dec 2025): stabilises raw material supply.
  3. Exports Promotion:
    • Duty Drawback, RoDTEP schemes.
    • Free Trade Agreements (FTAs) negotiations to expand markets.
Challenges
  • Low productivity compared to global average.
  • Heavy dependence on Bt cotton → pest resistance (pink bollworm).
  • Water-intensive crop → unsustainable in arid zones.
  • Price volatility due to global cotton markets.
  • Farmer distress despite MSP procurement.
  • Competition from synthetic fibres (polyester, nylon).
Way Forward
  • Diversify cotton varieties beyond Bt (introduce desi & pest-resistant hybrids).
  • Strengthen irrigation efficiency (micro-irrigation).
  • Enhance value-addition (move up from raw cotton exports to finished textiles).
  • Expand global market access via FTAs & branding “Indian Cotton”.
  • Promote sustainable cotton farming (organic cotton, climate-smart practices).

 

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