Rising MSP Without Rising Productivity Could Deepen India’s Cotton Problem

Manish P. Daga

Managing Director,

COTTONGURU

Why a support-price-first approach may weaken domestic cotton demand, complicate textile sourcing, and still leave farmers under stress

India’s cotton economy is entering a phase of deep contradiction. On one side, the government continues to raise Minimum Support Prices to protect farmers. On the other, cotton productivity, fibre quality, and cost competitiveness remain weak relative to the needs of India’s textile industry and the realities of the global market. The result is a dangerous imbalance: higher price support without enough productivity growth.

The latest CCI data makes the scale of the issue clear. During the 2025–26 season, as on 28 June 2026, total cotton procurement stood at 105 lakh bales. Out of this, 79.34 lakh bales had been sold, including 33.57 lakh bales to mills and 45.77 lakh bales to traders, while 25.66 lakh bales remained unsold. These numbers underline one basic reality: the Indian cotton market is becoming increasingly dependent on large-scale intervention to absorb cotton when open-market demand is not strong enough at MSP-linked price levels.

That should worry the entire cotton value chain.

MSP plays an important role in protecting farmers from distress sales. But when MSP keeps rising while productivity remains low and global lint prices stay broadly stagnant, Indian cotton risks becoming less attractive not only in export markets, but even within India itself. Mills ultimately buy cotton based on price, quality, contamination, yarn realization, and competitiveness. If Indian cotton becomes structurally expensive without a matching improvement in yield and fibre performance, domestic demand starts weakening in relative terms.

That creates complications on both sides.

For the textile industry, costlier domestic cotton reduces procurement flexibility and adds pressure to yarn and fabric margins. Mills become more dependent on policy relief, import windows, or selective buying strategies. Some may shift toward imported cotton for specific qualities. Others may reduce aggressive domestic buying if Indian cotton does not offer the right balance of price and performance. Over time, this can distort the market and weaken confidence in the domestic cotton system.

For farmers, the outcome is even more troubling. A rising MSP may appear supportive, but if the market cannot naturally absorb cotton at those levels, then farmers become more dependent on CCI procurement rather than real competitive demand. That is not a healthy long-term solution. It can keep the crop moving in the short term, but it does not solve the underlying problem of low productivity, high cost per unit of output, weak fibre consistency, and inadequate farm-level resilience. In such a situation, the farmer is protected from immediate collapse, but not empowered toward sustainable profitability.

This is why India’s cotton debate must move beyond MSP alone.

The question isn’t whether MSP should exist. It should. The real question is whether MSP is being supported by a serious productivity strategy. Without that, the country risks creating a cycle where cotton becomes more expensive to support, more difficult to sell competitively, and more dependent on repeated intervention by CCI season after season.

That is precisely why the newly approved Mission for Cotton Productivity (2026–27 to

2030–31) is so important. With an outlay of ₹5,659.22 crore, the mission recognizes that India’s cotton sector is facing serious structural bottlenecks in productivity, quality, and competitiveness. But the challenge is that a lot still needs to be done for the mission to make a real difference on the ground.

The mission cannot remain only a budget announcement or a research-and-extension statement. It must translate into measurable field-level outcomes: higher yields, better seed reliability, lower contamination, stronger agronomy, improved pest and moisture management, more resilient farm practices, and better alignment between what farmers grow and what mills actually need. Productivity must not be treated as a technical side issue. It is now central to farmer welfare, industry competitiveness, and national cotton strategy.

If India succeeds only in raising MSP but fails to raise yield and quality, then it will end up protecting cotton without strengthening cotton.

That would be a costly mistake.

A competitive cotton economy cannot be built only by increasing support prices. It must be built by increasing output per hectare, improving fibre quality, and reducing the gap between domestic cotton economics and global market realities. Otherwise, the country may see more CCI buying, more unsold stocks, more industry discomfort, and continued farmer distress — all at the same time.

India still has the chance to course correct. But that correction must begin with one clear principle: productivity is the real foundation of price strength. Without it, higher MSP may offer temporary relief, but it cannot deliver lasting cotton security, neither for farmers nor the textile industry.