Cotton harvest to decline to a decade low of 29.2 million bales in 2026

A sharp drop in domestic fiber availability is redrawing the commercial landscape for India’s textile value chain this January. With ICRA projecting the 2026 cotton harvest to decline to a decade low of 29.2 million bales, the spinning sector is confronting a supply-side shock. This 1.7 per cent Y-o-Y decline is primarily attributed to a 20 per cent contraction in cultivation acreage from 2021 peaks, as farmers transition to more lucrative oilseeds. The resulting scarcity has forced a firm pricing floor for cotton yarn, with North Indian hubs like Ludhiana recording price escalations of Rs 2-Rs 5 per kg this week alone.

The industry now faces a ‘spread squeeze,’ as the cost-to-yarn margin narrows to approximately Rs 96-Rs 100 per kg. While domestic demand remains stable, the downstream apparel sector is displaying marked caution. Garment exporters are currently balancing high input costs against an increasingly competitive global market particularly as US tariffs on Indian apparel exports continue to dampen volume growth. To bridge the domestic shortfall, India has radically scaled its import reliance, with a reported 85 per cent rise in foreign fiber procurement during the first five months of the current fiscal year.

Spinners are operating in a high-stakes environment where raw material security is as critical as price discovery, notes a senior market analyst. Although larger vertically integrated mills are leveraging higher-count yarns to protect realizations, mid-scale players are struggling with margin erosion. The sector’s ability to sustain the projected 7-9 per cent revenue growth in 2026 will depend heavily on stabilized global demand and strategic fiber sourcing to offset the domestic yield deficit.