Rising cotton costs and shrinking supply strengthen the case for man-made fibres: Nuvama
New Delhi, August 3
India's cotton surplus is narrowing, making cotton more expensive for textile producers and increasing the need to diversify towards man-made fibres, as per a report by Nuvama Institutional Equities.
The report noted, India's cotton balance sheet is shifting from a surplus towards equilibrium. Production has declined from a peak of 6.31 billion kg in CS21 to an estimated 4.95 billion kg in CS26, while imports have tripled from 0.26 billion kg to 0.80 billion kg.
Meanwhile, exports have fallen sharply from 1.28 billion kg to 0.20 billion kg, while Shankar-6 cotton prices surged from INR 110/kg in CS21 to INR 221/kg in CS23 before moderating to around INR 155/kg, as per the report.
Country-wise trade flows reflect this adjustment, with Bangladesh's mills emerging as key buyers of Indian raw cotton, while imports are increasingly sourced from the US and Australia for fine-staple varieties that India does not produce in sufficient quantities.
Highlighting the implications of this shift, Nuvama noted, "For spinners, the raw material cushion is thinning and the price series is a margin series: spreads compress every time the crop disappoints."
However, for the broader industry, the fading cotton surplus strengthens the case for expanding man-made fibre (MMF) capacity, as the textile value chain increasingly needs to diversify its fibre mix.
"The value chain from field to fabric is the map on which the rest of the report moves downstream," it said.
The report further highlighted, India historically bought cotton at an 8-11 per cent discount to global prices as a surplus producer, with domestic prices linked to export parity, however, that discount has now disappeared.
The report further stated, "The FY26 convergence to parity reflects duty waivers rather than fundamentals."
According to Nuvama, the exemption was reinstated on January 1, 2026, but waived again only for the June 1-October 31, 2026 period, making the relief temporary and focused on supporting farm incomes rather than improving mill competitiveness.
— ANI
Reader Comments
It's concerning to see our cotton production drop from 6.31 billion kg to just 4.95 billion kg. But this is also a wake-up call for farmers. Instead of sticking to traditional crops, we need better support for diversification. The government should encourage both quality cotton AND synthetic fibres.
Based on my visits to textile hubs in Surat and Tirupur, the shift to MMF is already happening on the ground. The only question is whether policy can keep pace. The temporary duty waivers are just patchwork—we need a comprehensive fibre policy for the next decade.
As someone who works in the spinning industry, this report is spot on. Our margins are getting squeezed every season because of unpredictable cotton supply. MMF isn't just an option anymore, it's a necessity for survival. Hope NITI Aayog takes note. 📊
While MMF is important, I worry about our cotton farmers. They're already struggling with rising input costs and unpredictable monsoons. If we move too fast towards man-made fibres, what happens to millions of livelihoods in Gujarat, Maharashtra and Telangana? We need a balanced approach.
Interesting data on Bangladesh buying our raw cotton while we import fine-staple from Australia and the US. This is classic value erosion—we export cheap and import expensive. MMF could definitely help break this cycle. The question is, will our infrastructure support it?
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.