Exports Have Dropped Sharply From 1.28 Billion Kg to 0.20 Billion Kg

India's cotton surplus is narrowing, pushing prices higher and strengthening the case for man-made fibres, according to a Nuvama Institutional Equities report. Production has fallen from a peak of 6.31 billion kg in CS21 to an estimated 4.95 billion kg in CS26, while imports have tripled from 0.26 billion kg to 0.80 billion kg. Exports have dropped sharply from 1.28 billion kg to 0.20 billion kg.

Shankar-6 cotton prices surged from ₹110/kg in CS21 to ₹221/kg in CS23 before easing to around ₹155/kg. Bangladesh's mills have emerged as key buyers of Indian raw cotton, while imports are increasingly sourced from the US and Australia for fine-staple varieties not produced domestically in sufficient quantities. "For spinners, the raw material cushion is thinning and the price series is a margin series: spreads compress every time the crop disappoints, Nuvama noted.

The fading surplus supports expanding man-made fibre capacity as the textile value chain diversifies its fibre mix. India historically bought cotton at an 8-11 per cent discount to global prices as a surplus producer, but that discount has disappeared. "The FY26 convergence to parity reflects duty waivers rather than fundamentals, the report said. The exemption was reinstated on January 1, 2026, but waived again only for the June 1-October 31, 2026 period, making relief temporary and focused on supporting farm incomes rather than mill competitiveness.