Cotton Prices Fall after India suspended the 11% import duty on cotton until October 31, triggering an immediate correction in domestic cotton and yarn markets and providing much-needed relief to the textile industry and exporters facing rising raw material costs.
Following the government’s notification, cotton bale and yarn prices declined by up to 3% on Monday, with industry stakeholders expecting a further 1-2% reduction in the coming days. The move has effectively reversed a sharp rally that had pushed cotton prices up by nearly 27% over the past three months.
According to K. Selvraju, Secretary General of the Southern India Mills Association (SIMA), cotton prices have already begun to soften, and spinning mills have been advised to reduce yarn prices accordingly. Cotton prices for the benchmark 29 mm variety had surged from ₹54,200 per candy in February to ₹69,200 per candy in mid-May before easing to around ₹65,000 per candy in recent weeks.
On Monday, the Cotton Corporation of India (CCI) reduced cotton prices by ₹700 per candy to ₹64,300 per candy. Yarn prices also witnessed a reduction of approximately ₹10 per kg, translating to a decline of nearly 3%.
Industry representatives believe the duty suspension will improve cotton availability in the domestic market and discourage speculative hoarding. Pradip Jain, Chairman of the Khandesh Ginning and Pressing Association, noted that trading activity remained subdued even after the latest price cuts, indicating the possibility of further corrections.
Prior to the duty exemption, cotton prices were projected to touch ₹75,000 per candy due to supply concerns and stock accumulation by traders. The government’s decision to allow duty-free cotton imports from June 1 to October 31 is expected to stabilize the market and improve the competitiveness of India’s textile sector.
Textile industry bodies, including SIMA and the Tiruppur Exporters’ Association, had urged the government to remove the import duty, arguing that Indian manufacturers were at a disadvantage compared to competitors in Bangladesh and Vietnam, where imported cotton enters duty-free.
Exporters have also highlighted India’s growing dependence on imported export-quality cotton amid stagnant domestic production. Rising cotton costs have squeezed margins and weakened the competitiveness of Indian yarn, fabric, and garment exports in international markets.
According to SIMA, India’s share in the global textile trade has remained around 4% for the past two decades, while Bangladesh’s share has increased from 2% to 6% and Vietnam’s from 0.6% to 5%.
Vijay Agarwal, Chairman of the Cotton Textile Export Promotion Council (TEXPROCIL), stated that most cotton stocks are currently held by stockists and multinational firms rather than farmers. He said the removal of import duty is likely to force hoarders to lower prices, making exports more viable.
However, the decision has raised concerns among cotton farmers, particularly as it comes shortly after the government announced the ₹5,659-crore Cotton Productivity Mission aimed at enhancing domestic cotton production. Industry leaders maintain that the limited import window and the recent 7% increase in the Minimum Support Price (MSP) should help safeguard farmer interests during the upcoming harvest season.
The temporary duty suspension is expected to bring short-term stability to cotton prices, support textile exports, and strengthen India’s competitiveness in the global textile value chain.
Source: ET Retail
(Rewritten & adapted by Indian-Apparel.com News Desk)
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