India’s Cotton Supply Under Pressure as Crop Risks and Textile Demand Increase

Industry estimates point to production below 280 lakh bales and consumption above 360 lakh bales in 2026–27, raising concerns over import dependence, cotton prices and raw-material availability.

India’s cotton sector faces a potential supply-demand imbalance in the 2026–27 season as weather-related crop risks coincide with expectations of stronger textile export demand. Industry estimates cited in reports suggest that domestic production could fall below 280 lakh bales, while consumption may exceed 360 lakh bales if export opportunities translate into higher orders. The situation has renewed attention on cotton imports, import-duty policy and the need to improve domestic productivity.

Record Cotton Imports Highlight India’s Supply Gap

India’s cotton market is entering the 2026–27 season amid concerns about domestic availability and the textile industry's raw-material requirements.

According to industry estimates, India imported approximately 71 lakh bales of cotton, weighing 170 kg each, in 2025–26, compared with around 57.4 lakh bales in the previous season. The imports represented a record level.

The Southern India Mills’ Association (SIMA) estimated cotton consumption at approximately 340 lakh bales last season, while imports stood at around 70 lakh bales.

The figures highlight the gap between domestic production and the requirements of India's textile industry. Although the country remains one of the world's largest cotton producers, imports have become increasingly important for meeting consumption needs and sourcing cotton of specific qualities.

For 2026–27, industry estimates suggest production could fall below 280 lakh bales, while consumption could exceed 360 lakh bales if textile export demand strengthens. These projections remain estimates and depend on crop outcomes and market conditions.

Weather Conditions Raise Concerns Over Cotton Production

Erratic rainfall and moisture stress have added uncertainty to the domestic cotton outlook. Industry participants have reported that some farmers are reducing picking activity or clearing fields early to shift to alternative crops.

The World Meteorological Organization (WMO) had warned of a developing strong El Niño during 2026, raising concerns about abnormal rainfall and temperature patterns across agricultural regions.

For cotton cultivation, rainfall distribution during flowering and boll development can affect boll numbers, boll weight, fibre quality and overall yield. Consequently, planted acreage alone may not provide a complete picture of the crop available for the season.

The final production outcome will depend on weather conditions, crop development and harvesting performance across major cotton-growing regions.

Cotton Prices Rise Amid Supply Concerns

Benchmark Gujarat 29-mm cotton has reportedly increased by approximately ₹4,500 per candy since the beginning of the new cotton year on October 1, reaching ₹68,500 per candy.

The price movement has been attributed to expectations of a smaller crop, farmers holding kapas in anticipation of better prices and concerns over supply availability.

However, yarn prices have not increased proportionately, according to the report. This creates pressure for ginners and spinning mills, which must manage higher raw-material costs alongside comparatively weaker downstream realisations.

If the gap between cotton and yarn prices persists, textile manufacturers could face further pressure on operating margins.

Cotton Import Duty Policy Remains a Key Factor

The existing exemption from the 11% import duty on raw cotton was scheduled to continue through October 31, 2026.

Reports published on October 26 indicated that the Government was considering extending duty-free imports until at least the end of December. However, no final official extension had been announced at the time of those reports.

An extension could give spinning mills additional flexibility to source cotton from overseas markets and manage domestic supply constraints. At the same time, increased import availability during the domestic arrival season could influence prices and market sentiment for farmers.

The policy decision therefore involves balancing the raw-material requirements of textile manufacturers with the interests of domestic cotton growers.

Brazil’s Currency Movement Adds to Global Cotton Competition

Developments in Brazil have introduced another variable into international agricultural trade. Following the country's October 25 election, the Brazilian real reportedly experienced a sharp decline on October 26, described as one of its steepest falls in decades.

A weaker Brazilian currency can increase the local-currency returns on dollar-denominated exports, potentially encouraging exporters to sell more competitively in international markets.

As Brazil has become a major global cotton supplier, currency movements could influence the competitiveness of its cotton in overseas markets, including India.

For Indian textile manufacturers, this creates a potential contrast between tighter domestic cotton availability and competitive offers from international suppliers. The actual effect will depend on export prices, freight costs, exchange rates and the availability of suitable cotton grades.

Trade Agreements Could Support Higher Textile Demand

India's textile and apparel industry is anticipating improved export opportunities from trade agreements and stronger international demand.

Textile companies have reported improved enquiries from the UK, while a potential agreement with the European Union could create additional opportunities for textile and apparel exports.

Industry estimates suggest that cotton consumption could exceed 360 lakh bales if these opportunities translate into higher orders.

However, increased textile exports would also require dependable access to cotton in sufficient quantities and suitable quality. A widening gap between domestic production and consumption could increase the importance of imports and expose manufacturers to fluctuations in international prices.

The balance between export growth and raw-material availability is therefore becoming an important consideration for India's cotton and textile value chains.

Improving Cotton Productivity and Farmer Returns

Addressing the supply-demand imbalance requires more than short-term measures such as imports, import-duty adjustments and minimum support prices (MSP).

Improving domestic cotton productivity while maintaining fibre quality and farmer profitability is a longer-term priority. Potential areas of focus include climate-resilient varieties, improved agronomic practices, soil and water management, pest control, mechanisation, cleaner cotton production, traceability and farmer producer organisation (FPO)-led aggregation linked with textile buyers.

These measures can support more consistent production and improve the connection between cotton growers and textile manufacturers.

The objective is not simply to increase the number of bales produced, but to improve output reliability, quality and competitiveness while strengthening farmer returns.

As India's textile export opportunities develop, the availability of domestic cotton will remain an important factor in determining how effectively the industry can meet future demand.