India’s cotton outlook for marketing year 2025–26 faces declining planted area but steady demand; production is forecast at 24.5 million bales from 11.2 million hectares. Farmers in central states continue moving towards crops with higher profitability, while a higher MSP has pushed fibre costs up for mills. Consumption is forecast to remain firm, though mills are increasingly turning to imports for a cheaper and more reliable supply.
- Farmers in the states of Gujarat, Maharashtra, and Madhya Pradesh reduced cotton sowing in favour of crops like groundnut, maize, and pulses, driven by lower production costs and quicker maturity.
- Domestic cotton prices remain above global benchmarks, discouraging mills from purchasing large volumes of local fibre while supporting stronger reliance on imports from key suppliers.
- Exports of cotton products face constraints from reduced domestic availability, though garment and yarn shipments have increased, aided by rupee depreciation and lower yarn prices.
- These facts have been outlined in the 19 August issue of the USDA Foreign Agricultural Service’s Cotton and Products Update.
TRADE WINDS: Escalating US tariffs have already compound India’s cotton situation and the temporary suspension of import duties until 30 September. The waiver offers short-lived relief by lowering import costs and easing supply pressures, but its expiry may intensify challenges. Apparel exporters face mounting risks from tariff escalation, supply volatility, and the relocation of production, threatening both employment and India’s competitiveness across labour-intensive textile and apparel industries.
- US tariffs on Indian textiles are set to double, raising export costs and threatening growth in key markets.
- The suspension of duties applies only for a limited period, leaving importers exposed to renewed levies and uncertain access to affordable raw cotton supplies.
- Relocation of production abroad undermines domestic value addition, threatening the government’s ‘Make in India’ initiative and exposing millions of workers to job insecurity.
- Trade bodies warn that extending duty-free imports could stabilise operations, while prolonged tariff disputes risk compounding pressures across India’s wider manufacturing ecosystem.
UNDER PRESSURE: The immediate shift in India’s cotton outlook stems from new government announcements and updated sowing data that redefined market expectations for 2025–26. An 8% increase in the minimum support price for medium and long staple cotton will take effect from October, raising fibre costs for mills. Additionally, the Ministry of Textiles postponed enforcement of the Cotton Bales Quality Control Order until August 2026, easing compliance burdens for ginners and mills.
- The minimum support price has been revised to ₹7,710 per 100kg for medium staple and ₹8,110 for long staple cotton for the new season.
- Industry stakeholders had opposed the Cotton Bales Quality Control Order, citing logistical costs and compliance challenges, leading to the government’s decision to defer enforcement.
WHAT’S AT STAKE: Stakeholders across India’s cotton sector face significant risks from the current production and pricing environment. For farmers, shifts to alternative crops highlight growing concerns about cotton profitability and resilience against pests, water shortages, and weather extremes. Textile mills contend with expensive local fibre, forcing a strategic shift toward imported, cleaner cotton. Exporters risk tighter raw material availability, while policy uncertainty threatens India’s long-term competitiveness.
- Domestic cotton prices exceed Cotlook A-Index benchmarks by nearly 7%, deterring mills from purchasing large stocks for future requirements.
- Imports from countries such as Australia, Brazil, and the United States supply nearly 60% of India’s requirements, reducing reliance on inconsistent domestic fibre.
- Exporters face declining raw fibre shipments but benefit from growing garment, yarn, and fabric exports supported by rupee depreciation and competitive pricing.
WHAT THE DATA SHOWS: The 2025–26 cotton production forecast stands at 24.5 million 480-pound bales from 11.2 million hectares, down from earlier projections but supported by higher yields averaging 476kg per hectare. Consumption is projected at 25.7 million bales, slightly above last year, driven by steady demand for apparel exports. Imports are forecast at 2.5 million bales, while exports are expected to remain limited at 1.5 million bales.
- Stocks at the end of 2025–26 are estimated at 10.0 million bales, reflecting a stock-to-use ratio of 37%.
- Mill utilisation is reported at around 90%, supported by international demand for fabric, yarn, and apparel across Bangladesh, China, and Vietnam.
- Readymade garment exports rose 9% in April–June, while cotton yarn shipments increased 8% over the five-year average, driven by stronger overseas demand.
WHERE THINGS STAND:Outcomes vary dramatically across India’s cotton belt. In Punjab and Rajasthan, acreage increased significantly, supported by irrigation shifts and strong demand, while Haryana saw reductions due to pest infestation and labour costs. Central states, including Gujarat and Maharashtra, registered notable declines following farmer shifts to alternative crops. South India diverged from the national trend, with Karnataka and Telangana expanding acreage, though excess rainfall has increased the risk of disease and crop stress.
- Cotton planting in central India is nearly 9% lower than last year, with Madhya Pradesh alone recording an 18% fall in acreage.
- Punjab recorded a 20% expansion in sowing, while Rajasthan achieved a 27% rise as farmers responded to rising demand from local textile mills.
- Karnataka’s acreage surged by 17%, though excess rainfall in Telangana created risks of para wilt disease, threatening crop stability and potential yield losses.
