Cotton Prices Rise in India as Export Demand and Weather Risks Tighten Supply

India’s cotton market is facing increasing supply pressure as rising textile export expectations, weather-related crop risks and uncertainty over import duty relief push prices higher. Industry groups warn that the gap between domestic cotton demand and production could widen further during the 2026–27 cotton season.

With new trade opportunities emerging in the UK and potentially the European Union, textile mills may require more raw cotton in the coming months. At the same time, lower production estimates and record-high imports are adding to concerns about domestic availability.

Cotton Prices Increase in the Domestic Market

The price of Gujarat 29-mm benchmark cotton has increased by ₹4,500 per candy to ₹68,500 per candy, according to the spot market data cited in the report.

The increase reflects stronger buying interest and expectations of tighter cotton availability. Mills and traders are also monitoring the possibility of further price increases as the new cotton season progresses.

Trade Agreements May Increase Cotton Demand

New free trade agreements with the UK and the European Union could create additional opportunities for India's textile and garment exporters.

According to K. Selvaraju, Secretary General of the Southern India Mills Association, export demand from the UK has improved over recent months. He indicated that cotton consumption could exceed 36 million bales in the coming season if new trade opportunities generate stronger mill orders.

This could increase pressure on domestic cotton supplies, particularly if production falls short of expectations.

Cotton Production May Fall Below 28 Million Bales

Industry estimates suggest that cotton production could fall below 28 million bales due to weather-related risks, including El Niño and drought conditions in several regions.

If demand crosses 36 million bales while production remains below 28 million bales, the supply-demand gap could exceed 9 million bales. This would be higher than the estimated gap of around 7 million bales in the previous year.

Such a shortage could increase India's dependence on imported cotton.

Cotton Imports Reach Record Levels

India's cotton imports during 2025–26 are estimated at 7.1 million bales, with each bale weighing 170 kg. This compares with 5.74 million bales imported in the previous year.

The Southern India Mills Association has also raised concerns about raw cotton availability and price instability. In addition to the quantity of cotton, mills are concerned about the availability of good-quality cotton for spinning and processing.

Import Duty Exemption Creates Market Uncertainty

The temporary exemption from the 11% import duty on raw cotton was scheduled to end on October 31, 2026. The exemption had applied from June 1 to October 31, 2026.

Market participants are watching for a decision on whether the government will extend the exemption. Any change could affect the cost of imported cotton and influence domestic market prices.

This uncertainty is encouraging mills to plan their purchases carefully and secure raw material supplies.

Farmers Hold Stocks as Mills Face Higher Costs

Farmers in some regions are reportedly holding cotton in expectation of better prices. Lower soil moisture and changes in crop practices have also affected arrivals in certain areas.

Meanwhile, ginners and textile mills are facing pressure because yarn prices have not increased in line with raw cotton costs. This is reducing processing margins and making it difficult for businesses to pass higher input costs through the textile supply chain.

Cotton Market Outlook for 2026–27

India's cotton market could remain sensitive to several factors:

• Actual cotton production and weather conditions.

• Demand from textile exporters following new trade agreements.

• Government decisions on raw cotton import duty exemptions.

• Cotton import volumes and availability of quality supplies.

• Farmers' selling decisions and market arrivals.

If export demand strengthens while domestic production remains weak, cotton prices may continue to face upward pressure. However, the actual market trend will depend on crop arrivals, imports, government policy and mill demand.