India to purchase record cotton volume in upcoming season

India is expected to purchase a record volume of cotton from its farmers in the upcoming season, as domestic prices are being severely undercut by cheaper imports and weakened demand due to hefty US tariffs on textile exports. Cotton consumption in the world's second-largest producer, India has slowed. Exporters are reporting a sharp decline in orders from the United States, which accounts for nearly 29 per cent of India's annual textile exports (valued at $38 billion).

Atul Ganatra, President, Cotton Association of India (CAI), says, in this kind of market, farmers are unlikely to get the promised support price for their cotton. The government will be forced to step in and buy a record amount of cotton, potentially reaching 14 million bales, Ganatra estimates.

India has raised the official Minimum Support Price (MSP) for new-season cotton by 7.8 per cent to Rs 8,110 per 100 kg. However, local market prices are already hovering around Rs 7,000.

Starting this month, prices are expected to face further downward pressure starting next month due to the simultaneous arrival of the new domestic crop and cheaper imported cotton.

Farmers typically sell their crop to the state-run Cotton Corporation of India (CCI) when market prices fall below the government-set MSP. In MY 2024-25, CCI spent a record Rs 374.36 billion to purchase 10 million bales. Lalit Kumar Gupta, Managing Director, CCI, assures, there is no limit or target for buying cotton from farmers in the new season. The Corporation will buy the entire quantity that farmers bring, he adds.

The CCI plans to increase the number of procurement centers by 10 per cent to 550 and has the capacity to purchase over 20 million bales.