Cotlook Index: 27-07-2026
89.10 (-1.25)
Gujarat Textile Industry Faces Cotton Crisis as Raw Material Costs and US Tariffs Raise Pressure
Mon. 27th July 2026, Jayesh Chouhan (Source: www.smartinfoindia.com)
Cotton Crisis: Pressure from Fields to Ports; Gujarat’s Textile Industry Besieged on Multiple Fronts
Gujarat’s major textile industry is currently grappling with mounting margin pressures across several levels. The state—which accounts for approximately one-quarter of the country's spinning output and contributes nearly one-third of its raw cotton production—is under strain due to dwindling cotton availability, poor yields, rising energy costs, and shifting US trade policies.
The impact of these challenges is evident across the ginning, spinning, weaving, and textile processing clusters stretching from Saurashtra to Surat. The issue is not limited to a shortage of raw materials; rising production costs and sluggish demand have further squeezed industry margins.
The area under cotton cultivation in Gujarat has shrunk from 26.79 lakh hectares in the previous season to 23.62 lakh hectares. Faced with an erratic monsoon, rising cultivation costs, and lower returns from cotton, many farmers in Saurashtra and North Gujarat are shifting towards groundnut and other oilseed crops. Additionally, the growing menace of the pink bollworm in Bt cotton has increased both costs and risks for farmers. According to estimates by the Cotton Association of India (CAI), cotton pressing in Gujarat has dropped to around 76 lakh bales, whereas production in Maharashtra is reported at approximately 85 lakh bales.
Raw cotton prices have surged from ₹54,000 per candy to over ₹66,000 per candy. However, the price of finished fabric has not risen at the same pace as yarn prices. Consequently, producers have been unable to pass the full burden of increased costs on to buyers. Industry bodies in Surat estimate that weaving and processing units have incurred losses ranging from ₹2,500 crore to ₹3,000 crore.
Many units have curtailed production due to weak demand and accumulating inventories. Some mills have reduced production shifts by up to 50%, while others have decided to halt operations for up to two days a week.
Energy costs have further exacerbated the crisis. Mills in Rajkot, Kadi, and Ahmedabad are forced to rely on expensive grid power due to the limited availability of low-cost captive solar and wind energy.
Meanwhile, the threat of an additional 10% tariff on Indian textile products—set to take effect under the US trade framework on July 24, 2026—continues to loom. Although India holds an advantage of approximately 2.5 percentage points over certain competing nations, the effective tariff could reach around 15.5% to 16% once MFN duties are factored in.
Industry bodies have urged the government to ensure a steady supply of raw cotton through the CCI, provide tariff relief within the India-US trade agreement, offer temporary relief on industrial electricity rates, and increase interest subsidies.
India’s Cotton Sector Enters a New Phase as Import Duty Waiver and Mission Kapas Kranti Drive Policy Shift
Mon. 27th July 2026, Jayesh Chouhan (Source: www.smartinfoindia.com)
India’s Cotton Sector Undergoing Transformation Amid Import Duty Waivers and ‘Mission Cotton Revolution’
New Delhi: Amidst import duty waivers and the launch of the ‘Mission Cotton Revolution,’ India’s cotton sector is navigating a phase marked by declining production and policy shifts. The government is simultaneously focusing on ensuring adequate raw cotton availability for the textile industry and advancing long-term plans to boost productivity and quality.
Data indicates that the country's cotton production fell from 352.48 lakh bales in 2020-21 to 290.91 lakh bales (provisional) in 2025-26. Shifts in the area under cotton cultivation are considered the primary reason for this decline; anticipating better returns, some farmers have switched from cotton to other, more profitable crops. However, cotton productivity remained relatively stable during this period, hovering between 428 and 451 kilograms per hectare.
Cotton prices have also fluctuated in line with domestic and international market conditions. Recently, international cotton prices rose by approximately 19%, while domestic prices for S-6 cotton saw an increase of around 18%. Raw cotton and cotton yarn are imported as needed to boost domestic availability and meet the requirements of the textile industry.
According to the government, the total availability of cotton in the country—comprising domestic production, carry-over stocks, and imports—is sufficient to meet the estimated consumption needs of the domestic textile industry. The situation regarding cotton availability, consumption, and market trends is being continuously monitored.
To provide relief to the textile industry, the government has waived the 11% import duty on cotton for the period from June 1, 2026, to October 31, 2026. Additionally, the exemption on import duty for Extra-Long Staple (ELS) cotton (ITC HS Code 52010025) continues, ensuring the availability of high-quality cotton. This exemption has been effective since February 20, 2024.
Furthermore, the government has approved a five-year ‘Mission Kapas Kranti’ with a budget of ₹5,659.22 crore, aimed at enhancing cotton productivity and improving quality. This mission will be implemented from 2026-27 to 2030-31. Its objective is to make the Indian cotton sector more competitive and sustainable by improving both productivity and quality.
Gujarat Cotton Sowing Nears Last Year’s Level
Mon. 27th July 2026, Jayesh Chouhan (Source: www.smartinfoindia.com)
Gujarat Cotton Sowing Nearly Matches Last Year; Gap Narrows to Just 0.8%
Gujarat's cotton sowing has almost caught up with last year's pace, easing concerns over delayed planting earlier in the season. According to the latest data from the Gujarat Agriculture Department, cotton has been sown in 20.01 lakh hectares as of 27 July 2026, compared to 20.17 lakh hectares during the same period last year—a marginal decline of just 16,116 hectares (0.8%).
The biggest drag on overall acreage continues to be Saurashtra, where cotton sowing stands at 13.58 lakh hectares, down from 14.75 lakh hectares last year. Lower acreage in key cotton-growing districts such as Surendranagar, Rajkot, Jamnagar, Morbi and Botad has kept the region behind last year's pace.
However, the shortfall has been largely offset by strong gains in other regions. Middle Gujarat recorded the highest growth, with sowing rising to 2.41 lakh hectares from 1.78 lakh hectares last year. North Gujarat and South Gujarat also registered healthy increases, while districts including Vadodara, Chhota Udaipur, Sabarkantha, Ahmedabad, Bhavnagar and Amreli reported better sowing than a year ago.
With cotton sowing now virtually at par with last year's level, the focus will shift to crop development and monsoon performance, which will play a crucial role in determining Gujarat's cotton production prospects for the 2026-27 season.
Polyester prices rise sharply in India amid Hormuz oil risks
Tue. 27th July 2026, (Source: www.fibre2fashion.com/news)
Insights: India's polyester chain strengthened as Strait of Hormuz tensions lifted crude oil and petrochemical feedstock costs.
PTA, PSF and polyester yarn prices rose, while China's PTA and MEG remained volatile.
Indian buyers stayed cautious and purchased largely on a need basis, as uncertainty persisted over the sustainability of recent price hikes.
Indian polyester raw material and yarn prices moved sharply higher during the previous week as escalating tensions around the Strait of Hormuz pushed crude oil and petrochemical feedstock costs higher. Domestic producers announced successive increases in polyester filament yarn prices, while polyester staple fibre (PSF) prices were also raised amid mounting cost pressure.
Effective July 25, 2026, domestic purified terephthalic acid (PTA) prices increased by ₹6.30 per kg to ₹93.90 ($0.98) per kg, while monoethylene glycol (MEG) was priced at ₹58.70 ($0.61) per kg. Melt prices rose by ₹5.42 per kg to ₹100.72 ($1.05) per kg. PSF prices were also increased by ₹3 per kg with effect from July 25. Polyester filament yarn manufacturers announced multiple price increases during the week. A prominent manufacturer raised partially oriented yarn (POY) prices by ₹2 per kg across all deniers and lustres on July 22, taking 126/34 semi-dull (SD) to ₹120 ($1.25) per kg and 120/72 SD to ₹121 ($1.26) per kg. Another ₹2 per kg increase was announced on July 23, lifting the respective prices to ₹122 ($1.27) and ₹123 ($1.28) per kg. Another major manufacturer increased fully drawn yarn (FDY) prices by ₹5 per kg across bright and semi-dull products with effect from July 23. RIL’s POY and polyester textured yarn (PTY) prices were also increased by ₹3 per kg from the same date, while its fine-denier product was priced at ₹121 ($1.26) per kg. In China, polyester feedstock prices remained volatile. CFR China PTA was assessed at $820 per tonne on July 20, before falling to $805 on July 21. It subsequently climbed to $825 on July 22, and $840 on July 23, before retreating by $20 to $820 per tonne on July 24. MEG moved from $610 per tonne on July 20 to $602 on July 21, before rising successively to $609, $615 and $631 per tonne over the following three sessions. The polyester market’s strength came amid heightened volatility in global energy and petrochemical markets linked to tensions around the Strait of Hormuz, a critical route for international crude oil and petroleum product shipments. Concerns surrounding energy and feedstock flows increased cost pressure across the Asian petrochemical chain. The impact was particularly visible in naphtha, a key upstream petrochemical feedstock. CFR Far East Asia naphtha prices surged by $40 per tonne to $851-853 per tonne on July 20. The sharp increase strengthened the cost base for downstream petrochemicals and added upward pressure on polyester raw materials. Market participants said higher upstream costs prompted Indian producers to revise polyester raw material and yarn prices upwards. However, downstream textile buyers remained cautious, with purchases largely need-based amid uncertainty over the sustainability of the sharp price increases.
Polyester prices are expected to remain sensitive to crude oil movements and developments around the Strait of Hormuz. Continued disruption or heightened risks to energy flows could keep feedstock costs elevated, while an easing of geopolitical tensions and crude oil prices could bring some correction across the polyester value chain.
Weak Monsoon Triggers Crop Losses and Migration Crisis Among Farmers in Karnataka, Andhra Pradesh
Tue. 28th July 2026, Jayesh Chouhan (Source: www.smartinfoindia.com)
Farmers in Karnataka and Andhra Pradesh Face Crisis Due to Weak Monsoon Kalaburagi/Jogulamba Gadwal: A weak monsoon and a lack of rainfall have compounded the difficulties faced by farmers in the Kalyana Karnataka region and parts of Andhra Pradesh. Crops dependent on rainfall—such as soybeans, pulses, and cotton—are withering due to the absence of rain. With agricultural employment opportunities dwindling, farmers and farm laborers are being forced to migrate to cities like Bengaluru, Hyderabad, and Pune.
Farmers in the Kalaburagi, Ballari, Yadgir, and Raichur districts of Kalyana Karnataka are still awaiting good rainfall. In many areas, the soil in the fields has dried up, and crops are failing. In some places, seeds failed to germinate, while in areas where plants did sprout, they have become weak and are drying up due to a lack of soil moisture. Water shortages in ponds and reservoirs have further exacerbated the farmers' plight. With insufficient water available for irrigation, many farmers are facing the crisis of having to sow their crops all over again.
According to farmers' organizations, migration this time is not limited to farm laborers alone; small and medium-scale farmers are also leaving their villages in search of employment in cities due to agricultural losses. Many families are settling in other cities while making arrangements for their children's education.
Madhav Reddy, President of the Karnataka Rajya Raitha Sangha-Hasiru Sene, stated that both farmers and farm laborers have been affected by the lack of rain. He urged the government to declare the affected areas drought-hit and provide relief to the farmers. Sharanabasappa Mamashetti, the Kalaburagi District President of the Karnataka Pranta Raitha Sangha, noted that farmers' crops have been completely destroyed in many areas. He demanded that the government provide free seeds and fertilizers, as many farmers are unable to afford replanting after suffering such heavy losses. Meanwhile, in Undavalli village of Andhra Pradesh's Jogulamba Gadwal district, a farmer named Razak used a tractor to clear away 10 acres of cotton crops that had been ruined by the lack of rain. He had sown cotton on leased land a month ago, but the lack of rainfall stunted the plants' growth. According to the farmer, he has suffered a loss of approximately ₹1.50 lakh. The weak monsoon has created a severe financial crisis for farmers in both states. Farmers' organizations are demanding drought relief, assistance with seeds and fertilizers, and immediate measures for the affected farmers from the government.
Cotton Yarn Industry Set for Strong Recovery in FY27, Revenue Growth Seen at 9-11%
Tue. 28th July 2026, Jayesh Chouhan (Source: www.smartinfoindia.com)
Cotton Yarn Industry Poised for Strong Recovery in FY27; Revenue Projected to Rise 9-11% India's cotton yarn industry is expected to witness a strong recovery in the 2026-27 fiscal year (FY27). After remaining largely flat in FY26, the industry's revenue is projected to grow by 9-11%. This growth will be driven by a 6-8% improvement in yarn realizations and a 2-4% increase in volume. The industry is likely to gain momentum from improved exports and rising demand in export-oriented downstream segments such as readymade garments and home textiles. According to CRISIL Ratings, the profitability of cotton yarn manufacturers is also expected to improve alongside revenue growth. Operating margins are projected to expand by 150-250 basis points, supported by better cotton-yarn spreads. An analysis of approximately 70 cotton spinning companies within CRISIL Ratings' portfolio indicates that improved earnings will strengthen cash flows and enhance the companies' credit profiles. Ankush Tyagi, Director at CRISIL Ratings Limited, stated that exports would be a key growth driver for cotton yarn manufacturers in FY27. Export revenue is projected to grow by 12-14%, potentially raising the share of exports in the industry's total revenue to 30-31%, up from around 28% in the previous fiscal year. Rising demand from key markets like China and Bangladesh is expected to support export growth. A decline in domestic cotton production in China is likely to increase the need for imports. Meanwhile, improved political stability in Bangladesh is expected to lead to a recovery in its readymade garment industry. The domestic market, which accounts for approximately 70% of the industry's total revenue, is also projected to grow by 7-9% in FY27. Normalization in the US tariff regime and improved offtake in export-oriented downstream segments could support domestic demand. Despite a 10–15% rise in cotton prices, the cotton-yarn spread could reach ₹108–110 per kilogram in FY2027, driven by robust demand. This is expected to strengthen operating margins to 11–12%. According to Pranav Shandil, Associate Director at CRISIL Ratings, improved operating profits will bolster cash accruals, aiding companies in funding regular capital expenditure and strengthening their balance sheets. Gearing is projected to remain around 0.55–0.60 times, with interest coverage estimated at 4.25–4.50 times.
However, risks such as the potential impact of El Niño on cotton production, the significant gap between domestic and global cotton prices, and any future tariff revisions will need to be monitored.
ICE cotton closes higher on weaker dollar, technical buying
Tue. 28th July 2026, (Source: www.fibre2fashion.com/news)
Insights: ICE cotton futures rose for a fifth straight session, with the December 2026 contract settling 0.90 cent higher at 80.88 cents per pound as a weaker US dollar, technical buying and strong Chinese reserve purchases supported prices.
Tight certified stocks also aided sentiment, while traders now await the US Federal Reserve, weather and export demand for further direction.
ICE cotton futures closed higher for the fifth consecutive day yesterday, due to a weaker US dollar supported by improving competitiveness of US cotton in the global export market. Recovery was also driven by technical buying after price found support near key levels following the last week’s decline.
The most active December 2026 contract settled at 80.88 cents, up 0.90 cent. The contract recovered about 73 per cent of Friday’s 123 points decline. The contract posted its fifth higher close in the last 6 sessions, with a net gain of 225 points over that period.
The session recorded a lower higher and lower low than Friday but finished near the day’s high, a notable improvement after Friday’s weak close near the lows.
Market analysts said last week’s sell-off had found support and the market was now testing nearby resistance levels.
Trading activity moderated after Friday’s heavy spread-related session, with volume easing to 38,785 contracts from 58,368 on Friday, but remaining close to last week’s average, suggesting orderly market participation rather than panic-driven selling.
China’s state reserve auction continued to underpin sentiment, recording its sixth consecutive full sell-out. Around 8,022 tonnes were sold on Monday, taking cumulative sales over six sessions to 48,131 tonnes. US cotton accounted for 56 per cent of purchases, followed by Brazil and Xinjiang at 22 per cent each. Continued buying of US cotton at roughly twice the pace of other origins reinforced expectations of tightening deliverable supplies.
The USDA’s weekly Crop Progress report showed bolls opening reached 46 per cent for the week ended July 26, compared with 45 per cent a week earlier, but below 55 per cent reported a year ago and the five-year average. Bolls setting advanced to 81 per cent from 73 per cent, while squaring improved to 45 per cent from 32 per cent.
StoneX estimated Brazil’s 2026-27 cotton crop at 3.83 million tonnes, about 1.5 per cent lower than the previous season. Although planted area is expected to increase, dry weather in Mato Grosso is likely to weigh on yields.
Market fundamentals remained supportive as ICE certified stocks stayed tight and Chinese reserve buying continued to strengthen nearby supply expectations.
Market participants will closely watch the US Federal Reserve meeting, weather conditions in West Texas, China’s reserve auctions and US export demand for further direction this week. Export demand remains the key constraint despite the recent recovery.
This morning (Indian Standard Time), ICE cotton for December 2026 was traded at 80.53 cents per pound (down 0.35 cent), cash cotton at 75.59 cents (up 0.79 cent), the October 2026 contract at 78.80 cents (down 0.54 cent), the March 2027 contract at 82.10 cents (down 0.37 cent), the May 2027 contract at 83.44 cents (down 0.25 cent), and the July 2027 contract at 83.05 cents (down 0.52 cent). A few contracts remained at their previous closing levels, with no trading recorded so far today.
India Cotton Production Declines as Government Steps Up Support for Textile Industry
Tue. 28th July 2026, Jayesh Chouhan (Source: www.smartinfoindia.com)
Downward trend in cotton production; government takes steps in the interest of the industry. India has witnessed a downward trend in cotton production in recent years, primarily due to some farmers shifting to the cultivation of other, more profitable crops. Domestic cotton production in the country declined from 352.48 lakh bales in the 2020-21 season to 290.91 lakh bales (provisional) in 2025-26. The primary reason for this shift in production is the change in the area under cotton cultivation, as some farmers have adopted alternative, higher-profit crops. However, cotton productivity remained relatively stable during this period, hovering between 428 and 451 kilograms per hectare. Cotton prices have been influenced by conditions in both domestic and international markets. Recently, international cotton prices rose by approximately 19 percent, while domestic prices for the S-6 cotton variety increased by about 18 percent. Raw cotton and cotton yarn are imported as needed to meet the requirements of the domestic textile industry. The total availability of cotton in the country—including imports—is sufficient to meet the needs of the domestic textile industry. Estimated production, carry-over stocks, and imports collectively satisfy projected consumption requirements. Cotton availability and market conditions are continuously monitored to ensure timely action can be taken when necessary. The government has implemented several measures to support the textile industry. These include exempting cotton imports from the 11 percent import duty for the period from June 1, 2026, to October 31, 2026, to ensure adequate availability of raw cotton at competitive prices. Additionally, the import duty exemption on Extra Long Staple (ELS) cotton (ITC HS Code 52010025)—effective from February 20, 2024—has been continued to facilitate the availability of high-quality cotton for the textile industry. Furthermore, the government has approved a five-year 'Cotton Productivity Mission' (Kapas Kranti) for the period 2026-27 to 2030-31, with a budget of ₹5,659.22 crore, aimed at enhancing cotton productivity and improving quality.
Bangladesh targets production of 1.9 mn cotton bales by 2050
Tue. 28th July 2026, (Source: www.fibre2fashion.com/news)
Insights: Bangladesh has set a 2050 roadmap to raise cotton lint output to 1.9 million bales, with an interim 500,000-bale target for 2030.
The plan targets lower import reliance for textile mills and export-oriented garment supply chains that need about 9 million bales a year.
Farmer incentives, hybrid varieties, more acreage and credit support are central to delivery.
Bangladesh has set a long-range plan to lift domestic cotton lint production to 1.9 million bales by 2050, positioning the crop as a strategic raw material for reducing import dependence across the country’s textile and apparel supply chain. Under the government roadmap, cotton lint output is planned to rise first to 500,000 bales by 2030. As per data from the Cotton Development Board (CDB), Bangladesh's current annual production is more than 224,000 bales, equivalent to about 16-17 per cent of the domestic textile sector’s requirement. The target would be pursued through hybrid cotton varieties, wider cultivation and continuing incentives for farmers. The country has scope to raise output by using suitable land and improving yields through modern farming technologies. Cotton is now grown on about 45,000 hectares, while nearly 200,000 hectares could potentially be brought under the crop, the CDB data mentioned. The expansion plan focuses on char lands, the Barind tract of Rajshahi and suitable plain land in hilly areas that are not well suited to food crops. This approach is intended to raise cotton output without affecting food security. At present, the supply-chain gap remains large. Bangladesh’s export-oriented readymade garment industry requires about 9 million bales of raw cotton every year, while the country imports an estimated 7.5-8 million bales annually, and is among the world’s largest cotton importers. In fiscal 2025-26, Bangladesh imported about 7.3 million bales of raw cotton at a cost of nearly Tk 450 billion. Therefore, achieving the 500,000-bale target by 2030 could by itself reduce import dependence and save nearly Tk 8 billion a year in foreign exchange. The government’s measures include incentives for cotton growers, bringing farmers into the farmers’ card programme and extending credit support through carbon trading initiatives. Bangladesh currently ranks 40th among cotton-producing countries, while India, China, the US, Pakistan and Brazil dominate global output.In Bangladesh, cotton is generally sown from mid-June and harvested in December. CDB scientists said genetically modified cotton varieties, improved seed technology and better farming practices could significantly increase productivity. They also said more than 32 districts, especially in the southern, western, northern and central regions, have favourable conditions for upland and hill cotton.
