Indian spinning mills were already under margin pressure before the latest market developments. Sharp increases in domestic cotton prices prompted the government to suspend the ** per cent cotton import duty from June * to October **, ****. At the same time, the Cotton Corporation of India (CCI) procured **.*** million bales at the minimum support price (MSP) during the ****–** season, around * per cent higher than the **.*** million bales purchased a year earlier. CCI chairman and managing director Lalit Kumar Gupta said in a media interaction that Telangana, Maharashtra and Gujarat together accounted for nearly ** per cent of total procurement. Large-scale MSP procurement shifts a greater share of quality cotton into government stocks, leaving private mills to compete for a smaller pool of commercial supplies, often at higher prices. Since cotton accounts for roughly **–** per cent of standard cotton yarn production costs, a ** per cent increase in lint prices typically raises yarn production costs by about *–* per cent. With downstream demand remaining weak, mills have limited ability to pass these higher costs on to buyers, putting additional pressure on operating margins.
Trade and Sourcing Impact
For apparel manufacturers and global brands, the effects are likely to be most visible in widely used **s and **s combed and carded cotton yarns, which form the backbone of T-shirts, knitwear and other basic garments.
A tighter Indian cotton market could encourage buyers to shift incremental orders towards Bangladesh and Vietnam. However, the cost advantage may prove limited because both countries rely heavily on imported cotton and yarn. Any sustained increase in global lint prices is therefore likely to feed into production costs across competing sourcing destinations rather than remaining confined to India.
