Cotton Prices Rise In India Amid Supply Concerns

Why It Matters

Higher cotton costs erode profitability for Indian textile producers, potentially raising apparel prices globally and reshaping supply‑chain dynamics.

Key Takeaways

• Shankar‑6 cotton at Rs 60,500 ($645) per candy, up 8.5% month‑on‑month
• Domestic cotton output forecast 291 lakh bales, slightly below last year
• Textile mill consumption projected 312 lakh bales, outpacing supply
• Expiry of 11% import‑duty waiver lifts prices, curtails cheap imports
• Yarn and polyester price hikes lag cotton, squeezing mill margins

Pulse Analysis

The recent rally in India’s Shankar‑6 cotton underscores a tightening supply environment that is reverberating through the global apparel value chain. With the Committee on Cotton Production and Consumption estimating a modest dip to 291 lakh bales for the current season, mills are already feeling the squeeze as consumption forecasts climb to 312 lakh bales. Compounding the shortage, the scheduled termination of an 11% import‑duty waiver at the end of December 2025 removes a critical price‑buffer, forcing domestic buyers to shoulder higher raw‑material costs.

For spinning mills, the surge in cotton prices—from Rs 52,000 ($554) in early March to Rs 63,000 ($671) by early April—has outpaced the modest gains in downstream yarn and synthetic fibre costs. While 40s cotton yarn rose to Rs 290 ($3.09) per kilogram, polyester and viscose fibres saw only marginal increases. This disparity squeezes mill margins, especially as many facilities operate at roughly 50% capacity due to labor shortages triggered by regional elections. The combined effect is a heightened cost‑pass‑through risk for garment manufacturers and, ultimately, higher retail prices for consumers.

Looking ahead, Indian textile firms may need to accelerate cost‑mitigation strategies, such as diversifying fibre blends, investing in automation to offset labor gaps, and renegotiating supply contracts before the import‑duty waiver expires. Market watchers should monitor how these dynamics influence global cotton benchmarks and apparel pricing, as India remains the world’s largest cotton producer and a pivotal source for fast‑fashion supply chains. The evolving price landscape could also spur increased interest in alternative fibres, reshaping the competitive balance across the textile sector.