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Cotton in Crisis: MSP woes and seed price controls stifle industry growth


Cotton in Crisis MSP woes and seed price controls stifle industry growth


India's cotton sector, once a global leader, is struggling to hold onto its position. Policy decisions like the Minimum Support Price (MSP) for cotton and the Cotton Seeds Price (Control) Order, 2015 (CSPCO) are creating a tangled mess for the industry.

How MSP is sowing trouble

The government sets an MSP for raw cotton (kapas) to shield farmers from price fluctuations. However, this seemingly helpful policy becomes a double-edged sword when coupled with a Maximum Sale Price (MSP) for cotton seeds. This squeezes profit margins for seed companies, discouraging investment in crucial research and development (R&D) for high-yielding varieties.

The MSP for seeds acts as a disincentive for seed companies, say experts. Investment in R&D for better seeds suffers, hindering India’s ability to compete in the global market. We need cutting-edge seed technology to thrive.

Production in decline, imports on the rise

India's cotton production peaked at a staggering 390 lakh bales in 2013-14. Since then, it has witnessed a concerning decline of nearly 100 lakh bales annually. This shortfall is forcing textile mills to rely heavily on imports, which reached a value of Rs 10,353.96 crore in 2021-22. This import dependence weakens India's cotton export potential.

Is the CSPCO stifling innovation?

The CSPCO, by controlling seed prices, is seen as a potential roadblock to innovation. The order discourages companies from developing new Bt cotton varieties that can combat the ever-evolving pest landscape, explain experts, a seed industry representative. However, complete deregulation of the CSPCO raises concerns of exploitation by seed companies. Some farmer associations fear that without regulations, seed prices could skyrocket.

A market-driven approach

Countries like China and the US have adopted successful models that India can learn from. China's market-driven approach, coupled with strong intellectual property (IP) protection, fosters a thriving seed development ecosystem. This has resulted in high-yielding, pest-resistant varieties that give them a competitive edge.

Experts suggest a nuanced solution: delisting cotton seeds from the Essential Commodities Act (ECA) 1955. This would remove central control over seed pricing, paving the way for a market-driven system. Additionally, states could introduce regulations to ensure fair seed prices for farmers.

The revival of India's cotton sector hinges on a multi-pronged approach. The government should incentivize research in new technologies and promote Integrated Resistance Management (IRM) practices to combat pests. By fostering innovation, ensuring fair prices for farmers, and promoting a globally competitive seed industry, India can reclaim its rightful place as a cotton powerhouse.


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