Cotton procurement to reach record level in MY25-26

India’s cotton procurement is expected to reach a record level in MY25-26 as domestic prices are being pressured by a combination of cheaper imports and a drop in demand following significant US tariffs on textile exports. Cotton consumption has slowed in the world's second-largest producer, with exporters reporting a sharp decline in orders from the US. The US accounts for nearly 29 per cent of India's $38 billion in annual textile exports.

Atul Ganatra, President, Cotton Association of India, says, the demand slowdown is hurting the industry. In this kind of market, farmers are unlikely to get the promised support price for their cotton. In such a scenario, the government would have to intervene and buy a record volume, potentially around 14 million bales, he adds.

While India has raised the price at which it will buy new-season cotton from domestic farmers by 7.8 per cent to Rs 8,110 per 100 kg, local market prices are currently hovering around Rs 7,000. Pradeep Jain, a ginner based in Jalgaon, Maharashtra, said that prices are expected to face more pressure starting next month. This is due to increasing supplies from the new season's crop and the arrival of cheaper imported cotton.

Last week, India extended a cotton import duty exemption for three months, until the end of December. Farmers typically sell their crop to the state-run Cotton Corporation of India (CCI) when prices fall below the government's set floor price. In MY24-25, which ends this month, the CCI spent a record Rs 374.36 billion to purchase 10 million bales from farmers.

There is no limit or target for buying cotton from farmers in the new season. CCI will buy the entire quantity that the farmers offer, affirms Lalit Kumar Gupta, Managing Director, CCI. The Corporation also plans to increase its procurement centers by 10 per cent to 550 and has the capacity to purchase over 20 million bales, he notes.