Soon after US President Donald Trump imposed an additional 25% tariff on imports from India, Prime Minister Narendra Modi’s government started cosying up to China and Russia, which gave the impression that India is reciprocating to the American bullying. However, a huge chasm exists between objective reality and optics, as Mr Modi’s government is succumbing to Mr Trump’s tariff pressure, gradually.
In its bid to appease the US and Mr Trump, whose return to the White House was earlier jeered by Mr Modi’s far-right Bharatiya Janata Party (BJP), New Delhi has jeopardised the interests of over six million Indian cotton farmers and 40-50m people dependent on them, through a recent import exemption.
After declaring during his annual Independence Day speech on August 15th that he and his government would stand against all bullying as a wall to guard the Indian farmers’ interests, on August 18th, Mr Modi’s government slashed the 11% import duty on cotton until the end of September, which is the end of the current cotton year that starts on October 1st.
The tariffs consisted of a 5% basic customs duty, a 5% agriculture-infrastructure and development cess, and a 1% surcharge on both.
Though the move comes after the Confederation of Indian Textile Industries (CITI), a lobby of Indian textile barons, pressurised the government following the additional US tariffs, the US Department of Agriculture (USDA) has welcomed the move, signalling embedded American interests in the decision.
In a recent statement, the USDA has said, “The exemption is expected to increase U.S. cotton bookings, providing short-term relief to Indian textile exporters that may face higher U.S. tariffs along with domestic challenges at the end of this month (sic).”
The USDA noted that the exporters from Bangladesh, Cambodia and Vietnam, who enjoy significantly cheaper import duties vis-à-vis India’s 50% (25% base + 25% additional), will have an advantage in the American market unless India can make its products cheaper than its competitors.
The value of American cotton exports to India rose from $147m in 2020 to $211m in 2021 and $491m in 2022, before falling to $224m and $209m in the next two years.
In the first half of 2025, however, exports surged by 109% to $181m, up from $87m in the same period in 2024.
According to the USDA, nearly 95% of imported American cotton is processed and re-exported as textiles and apparel.
America is India’s largest market for such goods, accounting for $6bn of its cotton-based exports.
The ready-made garments account for 36% of its total textile exports to the US, and cheaper cotton will help the Indian manufacturers to compete with their competitors.
Meanwhile, this move has stoked anger among the farmers, who stand to lose due to cheap American cotton imports as well as the unavailability of a fair minimum support price (MSP) for cotton.
These two factors will now push them further towards an extreme crisis.
Reacting to this, the Indian farmers’ collective union platform, the Samyukta Kisan Morcha (SKM), has slammed Mr Modi’s succumbing to Mr Trump’s pressure and sacrificing the Indian farmers’ interests to appease Washington as well as the Indian textile giants.
Although Mr Modi’s government has accepted the CITI’s demand for access to cheaper raw materials to stay competitive in the global market, following the additional tariff burden, it has never accepted the farmers’ demand for a fair MSP on cotton.
On Monday, August 25th, the SKM leadership met in Punjab’s Jalandhar and demanded an immediate withdrawal of the August 19th notification on cotton import duty cut.
The SKM, which had earlier steered the historic 13-month-long farmers’ protest encircling New Delhi in 2020-21, has warned of a massive agitation if its demands are not met.
According to the SKM, Mr Modi’s succumbing to Mr Trump’s tariff pressure is a “death blow” to India’s six million cotton farmers.
“By succumbing to US pressure after Washington’s 50% tariff on Indian textile exports, the Modi government has chosen to punish Indian cotton farmers — the weakest link in the global supply chain,” the farmers’ body said during a press meet.
It accused the prime minister of hypocrisy for retreating on his Independence Day declaration and demanded fair MSP, calculated according to the MS Swaminathan Commission’s report, which suggested a comprehensive payout considering all cost factors involved in agriculture.
The SKM has demanded an MSP based on the Swaminathan Commission’s C2+50% formula, which will amount to Rs 10,075 per quintal for cotton.
For the cotton year (October to September) 2024-25, Mr Modi’s government has announced an MSP of Rs 7,121 per quintal for medium staple cotton and Rs 7,521 per quintal for long staple cotton.
The farmers’ body wants a hike in these rates and calculation on the C2+50% model from the forthcoming cotton year.
The farmers’ united body has also demanded Rs 2.5m as compensation for each family of cotton farmers who have died by suicide.
The farmers’ group cited data from Maharashtra state showing 479 suicides were recorded there in March and April this year.
Of these, 250 occurred in the distressed regions of Marathwada and Vidarbha in March alone.
While bereaved families currently receive Rs 100,000 in state assistance, the SKM demands compensation of Rs 2.5m, applied retroactively to cases dating from 2014.
The organisation contrasted this with government policy on debt relief.
“The Modi government has waived Rs 16.11 trillion worth of corporate loans in 11 years, but not a single farmer loan,” the SKM said.
“If an MSP at C2+50% is implemented, farmers would save Rs 25,000 even after donating the PM Kisan Nidhi of Rs 6,000 to the Prime Minister’s fund,” it added.
The PM Kisan Nidhi is a farmers’ pension scheme started by the BJP-led government in 2019, which pays a paltry sum of Rs 500 per month to the farmers who meet certain complex criteria.
Meanwhile, opposing Mr Modi’s succumbing to Mr Trump’s tariff pressure, the SKM also presented data on India’s cotton sector to illustrate systemic pressures.
Although the country dedicates 12.05m hectares to the crop—36% of the world’s total area—production has fallen over the past 11 years, from 6.56m metric tonnes in 2014-15 to 5.50m in 2023-24.
It noted that cotton subsidies in the US account for 12% of the value of production, compared with just 2.37% in India.
By 2024-25, China and the US are projected to account for 23% and 13% of global output, respectively.
The group estimates that the theoretical financial gap for farmers, had a minimum support price been set at the C2+50% formula, would be Rs 123.28bn.
This shortfall, it suggests, forms part of the context for India’s agrarian crisis, which has seen over 450,000 suicides since 1991—a rate of 31 a day under the current government, according to official data.
So far, the government has not taken into consideration the SKM’s demands. Rather, on the contrary, the government has further extended the cotton duty exemption until December 31st 2025, on Thursday, August 28th.
India has considerably scaled down its protectionism in the agriculture sector since joining the World Trade Organization, but the US and the West have been demanding an end to all remaining barriers so that their agricultural and dairy products can flood the Indian market.
During his US visit in February 2025, Mr Modi gave such assurances to Mr Trump in return for the US promise of more defence, space and technological collaborations.
The turn of events has proved that India has been at the losing end in this geopolitical chess game, as Mr Trump continues to use and bash Mr Modi as a weak link to get back at Washington’s rivals.
Now, it remains to be seen how the US leverages Mr Modi’s steps that display succumbing to Mr Trump’s tariff pressure and threats to farther its interests at the cost of India’s farmers.
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