India’s Cotton Sector Under Strain: Subsidy Disparities, Shrinking Acreage, and Import Pressures

Cotton, once regarded as India’s ‘white gold,’ is now at the crossroads of one of the most serious agrarian crises in decades. Declining acreage, falling productivity, pest resistance, and surging imports are compounding the challenges faced by farmers. The government’s recent move to remove import duties on cotton has intensified fears of a market collapse for domestic growers. At the same time, global disparities in subsidies and competitiveness are placing Indian farmers at a severe disadvantage, raising urgent questions about the future of India’s cotton economy.

India’s Cotton Economy Under Strain

1. Import Duty Removal and Market Pressure

The government’s decision to scrap the 11% import duty on cotton between August 19 and September 30 has opened the market to cheaper imports. For farmers, who had already invested in their crops months earlier, this decision threatens to depress mandi prices further at harvest time.

2. Weather-Related Crop Losses

In Punjab’s Fazilka district, over 2,000 acres of cotton have suffered damage due to persistent rains and water stagnation. With total cotton cultivation in the state at just 1.19 lakh hectares, the second lowest in decades, any loss significantly affects production. Experts warn that stagnant water for over 72 hours can severely damage cotton plants.

3. Pests and Rising Costs

The pink bollworm has developed resistance to Bt cotton, leading to renewed pest attacks. Farmers are now compelled to spend more on pesticides, raising their input costs and cutting into already shrinking margins.

4. Declining Acreage and Rising Imports

• Cotton acreage has fallen by 14.8 lakh hectares in just two years.

• Production has dropped by over 42 lakh bales.

• Imports between October 2024 and June 2025 crossed 29 lakh bales- the highest in six years.

These trends indicate growing dependence on imports, similar to India’s situation with edible oils and pulses.

Global Outlook: Production, Consumption, and Trade

1. USDA’s India Forecast (2025–26)(USDA FAS, 2025)

• Production: 24.5 million bales of 480 lbs each (31.4 million bales of 170 kg each).

• Acreage: 11.2 million hectares, down from 11.5 million last year.

• Yield: Estimated at 476 kg per hectare, slightly higher than the current season’s 464 kg/ha.

• Consumption: 25.7 million bales, supported by strong export demand and the India–UK CETA trade agreement.

2. Global Balance (USDA ERS, 2025)

According to the USDA Economic Research Service, global production is expected to fall by around 2%, with output at 116.6 million bales and ending stocks projected at 73.9 million bales. Global mill use, however, remains steady, tightening supplies and lending support to international prices.

Subsidy Disparities and Structural Imbalances

1. U.S. Support Programs

American cotton farmers benefit from extensive government support through programs like Price Loss Coverage, Agriculture Risk Coverage, and subsidized crop insurance. These mechanisms provide income stability and strengthen U.S. cotton’s competitiveness in export markets.

2. India’s Limited Support

In India, support is largely limited to the Minimum Support Price (MSP), fixed to ensure at least a 50% margin over production cost (CACP & Ministry of Agriculture, PIB, 2020). Direct financial subsidies remain far lower compared to developed economies.

3. Global Impact of Subsidy Distortions

Disproportionate subsidies depress global cotton prices, disadvantaging producers in developing economies. Without comparable safety nets, Indian farmers are unable to compete effectively in international or domestic markets.

Key Implications for India’s Cotton Sector

India’s cotton sector is facing mounting pressure as the removal of import duty exposes farmers to a flood of cheaper global cotton, even as they struggle with poor yields, rising input costs, and shrinking acreage. More fundamentally, structural inequalities in global subsidy regimes are compounding the crisis, leaving Indian farmers unable to compete on equal terms.

To safeguard the future of cotton, India needs a multi-pronged strategy: stronger crop insurance schemes, investment in drainage and irrigation systems, integrated pest management, and global advocacy for fair trade practices. Policymakers must also consider instituting a balanced import management framework that protects farmers' interests while ensuring industry competitiveness.

Without such steps, cotton risks following the trajectory of edible oils and pulses, from a crop of national pride to one of growing import dependence. Restoring the glory of ‘white gold’ is not just about protecting a crop; it is about securing the livelihood of millions of farmers and preserving India’s position as a leading cotton producer in the world.