Cotton output declines by 8%, imports likely to rise amid growing yarn demand: ICRA

India's cotton production for the 2025 cotton year (October 2024 to September 2025) has dropped by 8 per cent Y-o-Y to 29.9 million bales, marking a 10-year low, according to the first advance estimates by the Department of Agriculture and Farmers Welfare (DA&FW).

Despite a 10.4 per cent decline in sown acreage due to erratic rainfall, pest attacks, and high input costs, cotton yield improved by 3 per cent Y-o=Y.

The decline is also attributed to farmers shifting to alternative crops amid unfavourable realisations. ICRA’s report highlights a marginal rise in cotton consumption over the medium term, driven by improved yarn demand in domestic and export markets. This is expected to increase reliance on cotton imports.

While cotton prices have recently dipped below the minimum support price (MSP) following a 7 per cent MSP hike in October 2024, a gradual price recovery is anticipated. Spot contribution margins for spinners rose to Rs101/kg in November 2024, up from Rs 90/kg in FY24. However, sustaining profitability will hinge on their ability to pass on higher cotton prices.