India had already exported 8.5 million bales, higher than the export quota of 8.4 million bales the government had set in January, due to strong demand from China. Each bale is 170 kg. This increase led India's Directorate General of Foreign Trade (DGFT) to ban shipments, to ensure steady supplies for the local textile industry, the country's second-largest employer and which accounts for some 4 percent of GDP. Benchmark US May cotton futures climbed over 4.5 percent on Monday to their highest level since Feb. 29 after the announcement, erasing a fall of 2.13 percent last week which was driven by a stronger dollar and ample global supplies. Prices in China, India's top customer and the world's largest user of the fibre, gained over one percent. "Export of cotton has been prohibited till further orders," the DGFT said in a statement. "Export against registration certificates already issued will also not be allowed." The ban could spur China to buy more cotton from the United States, the world's biggest exporter, and further boost prices. But analysts said plentiful global supplies -- and weak demand for textile mills -- would put a cap on prices and purchases. "India's export ban is going to direct demand back to the US and that is going to help to put a floor on how low prices can go this year," said Abah Ofon, analyst at Standard Chartered Bank in Singapore. But he added: "US stocks are comfortable and I don't see this ban adding huge upside pressure on prices. What it will probably do is limit the decline in prices." China will cut its cotton imports by 1 million bales to 16 million bales of cotton in 2012/13 from the previous year, the US Agriculture Department said. India is one of China's major cotton suppliers , but analysts said the ban was unlikely to have much of an effect, because Chinese traders have already bought over 80 percent of the Indian cotton they signed deals for in the current marketing year that will end in September 2012. Demand from cotton mills was also low due to the global economic downturn, which meant China's cotton stocks were plentiful, said Dong Shuangwei, a senior researcher with Beijing Capital Futures. "China has already imported about 800,000 tonnes of cotton since September from India," Dong said, adding that China had planned to buy 1.3 million tonnes from India. "That means the ban will only impact between 300,000 to 350,000 tonnes of cotton, which have not been loaded. China's downstream demand is poor and there is still a large amount of cotton stocks at ports," he added. Cotton prices in China have fallen more than 35 percent from a record high about a year ago, sapped by weak demand from the country's textile industry. Plentiful global cotton supplies have kept prices in India's domestic market hovering around 34,000-35,000 rupees ($690-710) per candy of 356 kg each, a little over half the record high of 61,700 rupees per candy reached in March 2011. The export ban pushed down the key March cotton contract on the Multi Commodity Exchange by 4 percent, the maximum permissible limit, to 16,470 rupees per bale. Dhiren N. Sheth, president of the Cotton Association of India, which groups cotton exporters and traders, said he had appealed to the government to review the ban immediately. "It's a very regretful decision and this will permanently damage the reputation of India in the international market," Sheth said. "Prices are likely to touch support price levels very soon."