As Global Cotton Firms up and Rupee Weakens, CAI Pares 2025-26 Cotton Import Projections

Why It Matters

Higher import costs and a tighter supply‑demand balance could pressure Indian textile margins, while stronger domestic production may offset some price volatility.

Key Takeaways

• Import forecast cut to 47 lakh bales, down 3 lakh.
• Higher global prices and weak rupee raise import costs.
• Crop output revised up to 320.5 lakh bales.
• Consumption estimate increased to 315 lakh bales.
• Export outlook steady at 15 lakh bales, may rise.

Pulse Analysis

Global cotton markets have tightened as prices firmed and freight rates surged amid the West Asia conflict. For India, a depreciating rupee amplifies the cost of each imported bale, prompting the CAI to lower its import outlook for the 2025‑26 season. The revision reflects a strategic shift: Indian mills are now favoring domestically sourced cotton, especially after capitalising on the duty‑free window that ended in December, which helped absorb a sizable portion of the previous year’s import demand.

Domestically, the cotton crop outlook has improved markedly. Better‑than‑expected yields in Maharashtra’s Vidarbha region, alongside gains in Andhra Pradesh, Karnataka and Telangana, lifted the CAI’s production estimate by 3.5 lakh bales to 320.5 lakh bales. This surge supports a revised consumption forecast of 315 lakh bales, indicating robust demand from textile manufacturers. The tighter supply‑demand dynamics are expected to stabilise farm‑gate prices, offering some relief to producers even as import costs climb.

Export prospects remain cautiously optimistic. While the CAI kept its export target at 15 lakh bales, it signalled that a further rupee depreciation and rising global prices could make Indian cotton more attractive to neighboring markets like Bangladesh and China. Leveraging its geographic advantage, India could capture a larger share of regional demand, especially if freight disruptions persist. Policymakers will need to monitor currency movements and trade logistics to ensure the sector’s growth trajectory remains on track.