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).