Cotton shortage set to worsen as new deals drive export demand
The impact of El Nino weather conditions could further hurt domestic production, expected to fall by 3.4% to a new low in the 2026-27 crop year ended September. Cotton imports hit a record high in 2025-26 to an estimated 7.1 million bales of 170 kilograms compared to last year's imports of 5.74 million bales. Prices have also risen more than 7% in the past month.
India faces a looming cotton shortage as the nation ramps up textile and garment exports under new free trade agreements. A weak El Nino weather pattern threatens domestic cotton production, which is expected to drop by 3.4% in the 2026-27 crop year to a record low. Cotton imports surged to a record 7.1 million bales in 2025-26, up from 5.74 million bales the previous year. Prices have jumped over 7% in the past month, as the import duty exemption on raw cotton expires on October 31.
The exemption, initially granted from June 1 to December 31, 2025, was extended. With the new cotton year beginning on October 1, prices for benchmark Gujarat 29-millimeter cotton have risen ₹4,500 to ₹68,500 per candy. India imported over 7 million bales of cotton in 2025-26, consuming a total of 34 million bales. Industry leaders predict demand for cotton will surge in 2026-27 due to FTAs, including potential deals with the UK and EU.
Uncertainty over raw material supply and the El Nino-induced drought have dampened cotton yields, with production potentially falling below 28 million bales. Cotton demand could exceed 36 million bales, straining domestic supplies. Farmers are reluctant to grow cotton, opting for alternative crops due to delayed price increases and poor moisture levels. Industry experts warn that low cotton output could trigger significant shortages, as domestic prices already surpass minimum support price levels.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
