India eyes record cotton buying as imports, US tariffs dampen prices

MUMBAI: India is expected to purchase a record volume of cotton from farmers in the upcoming season, as domestic prices face pressure from cheaper imports and weakening demand following hefty US tariffs on textile exports, industry officials told Reuters. Cotton consumption in the world’s second-largest producer has slowed, with exporters reporting a sharp decline in orders from the United States, which accounts for nearly 29 percent of India’s USD38 billion in annual textile exports.

“Demand has slowed down, and that’s hurting the industry. In this kind of market, farmers are unlikely to get the promised support price for their cotton,” Atul Ganatra, president of the Cotton Association of India, told Reuters.

The government will have to step in and buy a record amount of cotton — maybe around 14 million bales, Ganatra said.

India has raised the price at which it will buy new-season cotton from domestic farmers by 7.8 percent to 8,110 rupees per 100 kg, but local market prices are hovering around 7,000 rupees.

Prices are expected to come under pressure from next month due to rising supplies from the new season’s crop and the arrival of cheaper imported cotton, said Pradeep Jain, a ginner based in Jalgaon in the western state of Maharashtra.