Competitiveness of Indian Agriculture Sector: A Case Study of Cotton Crop

Abstract

This study has critically examined the issue of Cotton subsidies in USA as well made a comparative analysis of cotton sector between USA and India in the background of USA claim that African cotton producers’ plight was not due to the trade-distorting subsidies of USA but was on account of upward trend in cotton production in India and China in defiance of market signals. This study also estimated the comparative advantage in cotton production and cotton export diversification by calculation various indicators. Result shows that India has comparative advantage in production and export of cotton in recent years. This study highlights that USA has 14 percent share in world production, however, its share in world export is 38 percent. USA exports 86 percent of cotton production to other countries. The cost of producing cotton is highest in USA, which is 4.5 to 6 times higher than India. During 1995-2010, USA has given about $37 billion to cotton producers though various programmes like counter-cyclical payments, decoupled income, commodity certificates etc. Despite high cost of cotton production, USA is enjoying artificial comparative advantage in cotton market due to high level of domestic support given to farmers and big corporation in USA.