Cotton Exporters in India should take advantage of the Rising Global Prices

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Cotton Exporters in India should take advantage of the Rising Global Prices


Cotton is the most popular fabric in India. It plays an important role in the Indian economy and therefore the list of top cotton exporters is growing. India has been the largest producer of cotton yarn in the world for a long time. India is also the world's largest exporter of cotton yarn. India's textile industry accounts for 5% of the country's GDP and 11% of total export revenue. 50% of the textile industry's income comes from the sale of cotton products.

The industry is also the second-largest employer in the country after agriculture, providing direct employment to more than 51 million people and indirect employment to 68 million people, including unskilled women. The textile industry is also expected to reach $ 223 billion by 2021.

Gujarat, Maharashtra, Telangana, Andhra Pradesh, Karnataka, Madhya Pradesh, Haryana, Rajasthan and Punjab are considered to be India's most important cotton-producing countries. According to statistics, cotton yarn exports contribute 23% to the country's total textile exports. India earns about $ 37 billion annually from cotton textile exports. Well-known international retailers such as H & M, JC, Tommy Hilfiger, WalMart, Levi Strauss, Mark & Spencer, Nike and Reebok are considered buyers of Indian cotton exports.

Cotton Growers are celebrating a sparking Diwali as they no longer feel burdened by financial stress as cotton prices across the country have been at record highs around 70% higher as compared to last year’s rates. Cotton farmers are seeing such prices for the first time. Currently in the domestic market cotton prices are hovering Rs. 8500 quintal across the country and go higher up to Rs. 10000 in some markets, the cotton growers are happy because last year the same price was between Rs. 4000 -5500 a quintal.

The cotton exporters worry about the higher freight cost and less availability of containers, and although monsoon has been good for cotton crops and there were no reports of any pest attack in the country. The farmers in India worry about the higher cost of production as the yield has significantly decreased where it used to be 15 quintals per acre during the non-Bt days (the Bt cotton is a variety grown to reduce pest attack), it has dropped to around 5 - 6 quintals per acre. The Government of India is taking efforts to solve problems related to less availability of containers and higher freight costs. It is already working with various authorities to provide containers for exports.

The Opportunity- During 2019-20, the export of cotton yarn, cotton fabrics, and handloom products reached US$ 10.01 billion. In April 2021, the export of cotton yarn/ fabs /made-ups, handloom products stood at US$ 1.06 billion. There is a bull run in the global market as raw cotton prices are at least 70% higher than last year’s rates. The export benchmark cotton named Shankar-6 which is grown in Gujarat grabbed around Rs. 67500 a candy (one candy is equivalent to 356 kg). The prices have zoomed to a decade high due to lower ending stocks and supply issues. Importers in New York are offering around Rs. 68,600 a candy for delivery of cotton in December. This is a great opportunity for cotton exporters in India and they should take maximum advantage of it.


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