Pakistan has, so far, contracted to import one million bales (170 kg each) of cotton from India after the crops there were affected by floods, according to Dhiren N Sheth, president of the Cotton Association of India (CAI).

Pakistan is buying more cotton from India as both the quality and quantity of the crop has come down. Pakistan’s cotton production is expected to drop 25 per cent to 11.4 million bales this year, the lowest since 2003.

As Pakistani garments manufacturers see Indian market as a big opportunity, the western neighbour has also opened its door to India to sell cotton, potentially moving local prices even as harvesting continues. Bangladesh and Indonesia will be the other two major buyers of Indian cotton.

Farmers in India last year suffered after China, the world’s top cotton consumer, cut import quotas to balance its own stockpiles accumulated over two years.

The wholesale prices of cotton were quoted above Rs 4,100 a quintal as of December 4 in most of the places in Gujarat and Telengana, compared with about Rs 3,200 a quintal in October 2014, according to the agriculture ministry data. The government had asked the Cotton Corporation of India (CCI) to buy the fibre at a minimum support price of Rs 4,000 a quintal. The MSP has not been increased this year.

With the increase in cotton prices, the government may not have to roll out subsidies. It released Rs 16,000 crore to buy 8 million bales from farmers in the 2014-15 season.

Due to lower freight, India is the first choice for buyers in Pakistan, according to Shahzad Ali Khan, chairman of Pakistan cotton ginner’s association.

Buoyed by the positive news from across the border, textile minister Santosh Kumar Gangwar last week said that the country’s cotton shipments were expected to rise by about 18 percent in 2015-16 compared with the previous year, citing estimates of the cotton advisory board (CAB).