- Prices fall as yarn makers shun domestic production
- US tariffs hit exports, import duty exemption a worry
Declining prices are putting Indian cotton growers in a bind. Prices are being impacted mainly by surging raw cotton imports. BigMint data reveals that the MSP for medium staple cotton raised 8% to INR 7,710/quintal in 2025-26 against INR 7,121/quintal in the previous fiscal, reversing a y-o-y trend seen since 2000-2001, the period from which data is available.
As per the US cotton balance sheet data, India’s cotton production in 2025-26 is estimated at 24,000 lakh tonnes. Of this one-third is procured by the Cotton Corporation of India (CCI) under the government’s minimum support price (MSP) programme. The balance two-third goes into the hands of private traders.
An 11% cotton import duty used to keep prices a little balanced between international and domestic, even though Indian prices were higher by 10-12% but the Indian government extended this duty exemption till 31 December 2025, earlier this year.
Reasons for falling cotton prices
Surging imports hit domestic offtake: One-third of the crop, which is with the government agency, CCI, is not being sold mainly because yarn manufacturers are not lifting the same since imported bales are cheaper. “Yarn manufacturers are meeting their demand through imports that are cheaper and of a standardised quality compared to the Indian produce,” informed a source.
Data available with BigMint shows that India is expected to become a net cotton importer in fiscal 2025-26 with almost 36 lakh bales whereas its exports will likely stagnate at a mere 16.60 lakh bales. It may be noted that a single bale comprises around 170 kg of raw cotton. In fact, data points out that India was a net importer in 2024-25 too with almost 39 lakh bales of imports against a lower 17.55 lakh bales of exports.
The USDA cotton balance sheet data also corroborates that India is currently a net importer of cotton with imports slated to touch 2,800 lakh tonnes against exports of 1,300 lakh tonnes. Last year’s imports were at 3,041 lakh tonnes pitted against 1,325 lakh tonnes of exports.
Trump tariffs impact exports: Where exports are concerned, even though volumes were higher than imports in previous years, these have started reducing from 2023-24 y-o-y from 29 lakh bales in 2023-24 to 17.55 lakh bales in 2024-25 and an estimated 16.60 lakh bales in 2025-26.
A key reason is the US tariffs. In August 2025, the US slapped a 50% tariff on textiles and apparel imports from India.
On the other hand, India extended the 11% import duty exemption on raw cotton till 31 December, 2025 in a bid to keep supply stable in the face of the US tariffs.
“The huge cotton textiles exports to the US have been almost halted, post-tariffs,” informed a source. This, in turn, is impacting sales of cotton yarn within the domestic market. Indeed, from the sizeable over 6,000 lakh tonnes seen in 2020-21, exports are now dwindling at 1,300 lakh tonnes, pressurising domestic stockpiles.
Indian cotton outpriced in global markets: MSP-linked pricing has made Indian cotton 10-15% costlier than its global counterparts, for much of the past year. Intercontinental Exchange (ICE) futures were ruling at around INR 46,000/candy a few months ago but CCI was quoting INR 55,000/candy.
US cotton futures have averaged around 66 cents per pound so far in calendar 2025, whereas the Indian is trading around 78 cents per pound in 2025-26, higher by around 20% to the benchmark ICE no.2 cotton futures.
Thus, mills find imports more viable despite the foreign exchange drain. On the other hand, local markets are not supporting the current prices amid slack exports and surging imports.
Outlook
The imports trend looked well entrenched in the near to medium term unless any policy shift is effected or government measures are announced to curb imports
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