Indian Cotton Imports Surge Despite Downward Pressure on Domestic Prices
The Indian cotton sector is facing significant challenges as imports have surged over the past seven months, highlighting urgent concerns about domestic productivity and competitiveness in global markets. This trend comes amid falling international cotton prices, creating a complex situation for farmers and textile manufacturers alike.
Sharp Rise in Cotton Imports
Recent data reveals a dramatic increase in raw and waste cotton imports into India. In January 2025, imports reached $184.64 million, representing a staggering 841% increase compared to January 2024, when imports were just $19.62 million.
The upward trend has been consistent over several months:
- December 2024: $142.89 million (compared to $29.47 million in December 2023)
- November 2024: $170.73 million (compared to $30.61 million in November 2023)
- October 2024: $127.71 million (compared to $36.68 million in October 2023)
- September 2024: $134.2 million (compared to $39.91 million in September 2023)
- August 2024: $104 million (compared to $74.4 million in August 2023)
Domestic Cotton Market Under Pressure
While imports have been rising, the Cotton Corporation of India (CCI) has been actively supporting the domestic market. Since the beginning of the new cotton season on October 1, 2024, the CCI has procured nearly 100 lakh bales of Indian cotton.
In December 2024, during peak cotton arrival season, the CCI purchased approximately 60% of daily arrivals at the minimum support price (MSP). As of March 9, 2025, the price of the premium Shankar 6 variety stood at ₹52,500 per quintal.
Farmers Face Production Challenges
Indian cotton farmers are expressing growing concerns about their ability to compete in this challenging environment. Jaipal, a cotton farmer from Telangana, noted that farmers are dissatisfied due to lower yields, while international cotton prices remain weak, prompting mills to source from global markets.
Kurbur Shanthakumar, president of Karnataka State Federation of Farmer Associations, highlighted a critical economic disparity: the production cost per quintal is approximately ₹9,000, while the MSP is set at ₹7,235. Even more concerning, brokers in the open market are offering only ₹5,000 to ₹5,500 per quintal, significantly below production costs.
Global Price Disparities Driving Import Surge
The price differential between domestic and international cotton markets appears to be a key factor driving the import surge. According to Manish Daga, president of the All India Cotton Farmers Producers Organisations Association, "Brazil is an aggressive seller in the international market. Australia, the U.S., Africa, and Brazil were all comfortably placed in prices until recently."
Pankaj Sharda, director at Indian Cotton Association, provided specific figures illustrating this disparity: "If Indian cotton is 80-85 cents a pound, Brazilian cotton is 60-65 cents a pound." This significant price gap has led Indian textile mills to take "a calculated risk" by importing cotton despite the 11% import duty.
Productivity Gap Remains a Critical Issue
Perhaps the most alarming statistic relates to productivity. Cotton yield in India averages around 450 kg per hectare, while countries like Brazil achieve 1,800-2,000 kg per hectare—more than four times higher. This productivity gap significantly impacts India's global competitiveness.
Further highlighting this disparity, India accounts for 38% of global cotton acreage but produces only 23% of global cotton output.
Government Response: Cotton Mission
Recognizing these challenges, the Union Budget announced in February 2025 includes a Cotton Mission specifically aimed at improving productivity. Industry experts suggest this initiative should focus on several key areas:
- Implementing acreage-based MSP for farmers
- Taking urgent steps to increase productivity
- Boosting textile exports to strengthen demand
- Ensuring "fibre security" for mills
Textile Industry Perspective
For the Indian textile industry, the situation presents both challenges and opportunities. With export demand increasing for garments and home textiles, manufacturers need to remain competitive. More than 60% of exported garments are cotton-based, making cotton pricing a critical factor in export competitiveness.
S.K. Sundararaman, chairman of the Southern India Mills' Association, noted that previous high import periods in 2018-2019 and 2021-2022 coincided with strong order volumes in the textile sector. He emphasized that addressing the productivity gap is essential for long-term sustainability.
Moving Forward
As the Cotton Mission begins implementation, stakeholders across the cotton value chain are watching closely. The ability to bridge the productivity gap while ensuring fair returns for farmers will be crucial to reducing import dependence and strengthening India's position in global textile markets.
For investors and market participants, developments in the cotton sector may present opportunities as policy measures aimed at increasing productivity begin to take effect.
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