India's cotton procurement set to reach record level

According to the Ministry of Agriculture, India’s cotton sowing area stood at 108.77 lakh hectares as of August 29, 2025, 2.62 per cent lower than 111.39 lakh hectares during the same period last year. The five-year average is 129.50 lakh hectares. Cotton sowing typically begins in May in north India and continues until the third week of September in central states.

The ministry estimated cotton production at 306.92 lakh bales of 170 kg each, 5.8 per cent lower than the 2023–24 marketing season. The Cotton Association of India (CAI) projected production at 311.40 lakh bales in its August 2025 report. Lower acreage may reduce production in the 2025–26 marketing season, beginning in October. However, government procurement is expected to remain strong due to current market dynamics. The MSP for medium staple cotton was raised by 8.27 per cent to ₹7,710 per quintal this year.

Trade sources noted that while higher MSP benefits farmers, it makes Indian cotton less competitive globally. ICE cotton December 2025 contracts traded at 66.03 US cents per pound, equivalent to ₹45,700 per candy of 356 kg (₹128 per kg). Even after adding import costs, foreign cotton will remain cheaper, while Indian cotton will cost no less than ₹63,000 per candy under the increased MSP.

The government recently extended duty-free cotton imports until December 2025, allowing the domestic textile industry continued access to cheaper cotton for an additional three months. The duty removal was initially limited to 40–42 days until the end of September, when the current marketing season ends, but was extended into the new season starting in October, when arrivals will pick up mid-month.

Market experts believe duty-free imports during the first three months of the new season will prevent domestic prices from rising. With domestic demand slowing due to cheaper imports, farmers will be compelled to sell to the CCI. Experts estimate procurement may reach 140 lakh bales, around 40 per cent higher than the current season’s 100 lakh bales, setting a new record for government cotton purchases.

ALCHEMPro News Desk (KUL)