Cotton yarn exports fall by 59% in H1FY23

The cotton sector of India is observing a downward trend due to high prices and weakening export demand. In 2022-23 (Apr-October), cotton yarn exports were recorded at US$ 1.39 billion, dropping by 51.45% YoY. Although cotton production in northern parts of India might stay stagnant, it is expected to rise in the western/central Indian states of Gujarat and Maharashtra.

Image Source: Pixabay

Cotton yarn exports from India have dropped by over 55% YoY during April-October, 2022-23. They are expected to drop by 28-30% in FY ’23 due to high prices and weakening export demand, according to a report by CareEdge Ratings. The report stated that the exports declined by 59% in H1, FY ’23 to 2.89 lakh tonnes. It was recorded at 6.95 lakh tonnes in H1 FY ’22, and is expected to fall further in H2, FY ’23.

Data released by Cotton Textiles Export Promotion Council (TEXPROCIL) stated that India witnessed a decline in cotton yarn exports from 69.5 crore kg in 2021-22 to 28.9 crore kg in 2022-23.

Total production of cotton in India has reduced from 352 lakh bales in 2020-21 to 315 bales in cotton season (CS) 2021-22. Due to recent imposition of import duty on raw cotton, domestic price of cotton increased by 39% from Rs 110 per kg in CS 2020-21 to Rs 154 per kg. Prices for cotton peaked at Rs 1.10 lakh per candy during FY ’22, which have started to moderate to Rs 65,000 per candy in October 2022.

India’s cotton production 2021-22

Year Area in lakh hectares Production in lakh bales Yield in kg per hectare
2020-21 132.85 352.48 451
2021-22* (P) 119.10 312.03 445
2022-23* (P) 125.10 341.91 465

Source:, P-Provisional

As the production cost of raw cotton is relatively high, cotton companies feel less competitive in the global market and are gradually switching to non-cotton production. Additional factors like climate issues, growth and productivity challenges faced by farmers contribute to the downfall of the cotton production. Some of them are:

  1. Water scarcity, poor soil health is a real challenge for India’s cotton farmers
  2. Constant pest infestation lingering over the crops
  3. Challenging working conditions, low wages to cotton farmers

Due to production and consumption margins, India recorded a huge surge of 545% YoY in cotton yarn imports during April-October 2022 to US$ 51.6 million. According to industry representatives, the imported yarn is coming cheaper, particularly from Viet Nam, whereas domestic yarn prices were high as well as volatile.

According to an industry source, “since the import duty on cotton has been re-imposed, many industries are now shifting to non-cotton production like linen, georgette etc.”.

To revive the production and exports of cotton, the Government of India has nominated The Cotton Corporation of India Ltd (CCI) for undertaking Minimum Support Price (MSP) operations. To protect the interest of cotton farmers, many initiatives have been taken by the organization, which include:

  1. Setting up adequate infrastructure including 17 branches and more than 450 procurement centers in 143 districts.
  2. Creation of MSP cell for monitoring MSP operations in all cotton growing states.
  3. Implementation of ERP system from procurement of seed cotton till its scale.
  4. Registration of farmers with their Aadhar no into ERP system.

In response to the demand of cotton industry for change of color of fertilizer bags (reused by farmers in cotton picking and storing) which is one of the major cause of contamination in cotton, the government has introduced ‘One Nation One Fertilizer’ scheme.

With continuous steps towards better production of cotton and several schemes introduced by government, the Cotton Association of India (CAI) has projected that although the cotton production in northern parts of India might stay stagnant, it is expected to rise in the western/central Indian states of Gujarat and Maharashtra in 2022-23.

Leave a comment

Subscribe To Newsletter

Stay ahead in the dynamic world of trade and commerce with India Business & Trade's weekly newsletter.