Discuss the role of tariff policy in balancing the interests of raw-material producers and value-added manufacturers in India.

Tariff policy sets the price at which imported inputs compete with domestic produce. It therefore decides who gains along a value chain: the farmer or the factory. India's recent extension of the cotton import duty exemption to December 31, after a poor Southwest monsoon [1], shows tariffs being used to balance the two. It also shows the limits of tariffs.

Tariffs serving value-added manufacturers

• Cheaper inputs: Waiving the 11% import duty on raw cotton lowers costs for spinning mills and garment exporters [2].
• Supply-shock buffer: Time-bound waivers fill gaps when domestic crops fail. In 2025, for example, the duty was waived from August [3] and the waiver was extended to December 31 [2].
• Tariff escalation: Low duties on raw inputs and higher duties on finished goods protect domestic value addition and export competitiveness.

Tariffs shielding raw-material producers

• Price protection: The import duty stops cheap foreign cotton from pulling farm-gate prices down at harvest.
• Fiscal backstop: When prices fall, the Cotton Corporation of India procures at MSP [2]. Duty-free imports therefore shift the cost of price support onto the budget.
• Committee caution: The Parliamentary Standing Committee advised that the government should not forgo import duty revenue. It also recommended procurement at 1.5 times the cost of production [4].

Limits of tariff balancing

• Timing risk: Waivers that overlap with peak arrivals can trigger distress sales. The marketing season begins October 1 [1].
• Policy uncertainty: Repeated short extensions make planning hard for both farmers and importers.
• Structural gap untouched: India's lint yield of about 447 kg/ha lags far behind Brazil and the US [4]. Tariffs cannot fix low productivity.

Way forward

• Calendar-linked tariffs: Open waivers in lean months and restore the duty before the harvest peaks.
• Productivity first: The Mission for Cotton Productivity (₹5,659.22 crore, 2026-27 to 2030-31) targets a lint yield of 755 kg/ha by 2031 [5].
• Rules-based triggers: Use price-band triggers instead of ad hoc notifications, so that policy stays predictable.

Tariff policy is a short-term lever that protects mills during shortages and farmers during gluts. Its fairness depends on timing, predictability and pairing with productivity reform. A calibrated tariff regime, backed by MSP and the cotton mission, can raise farm incomes (SDG 2) and sustain decent textile jobs (SDG 8). That is how India can balance its raw-material producers and its manufacturers.