Cotton Prices Crash Far Below MSP, Duty-Free Imports Hit Farmers Hard

Cotton farmers across the country are facing the brunt of duty-free cotton imports. In most parts of the country, cotton is being sold at prices ranging from ₹6,500 to ₹7,000 per quintal, compared to the minimum support price (MSP) of ₹8,110 per quintal. Meanwhile, the Cotton Corporation of India (CCI), the government agency authorised to purchase cotton at the MSP, has yet to fully prepare for procurement because it has not yet signed contracts with ginning units. As a result, farmers are forced to sell their cotton to private traders at prices below the MSP. For the current marketing season (2025-26), the central government has fixed the MSP for medium-staple cotton at ₹7,710 per quintal and for long-staple cotton at ₹8,110 per quintal.

According to sources, CCI has cotton surpluses from the previous season (2024-25). The central government's decision to allow duty-free cotton imports in September, followed by an extension of the period from September 30th to December 31st, 2025, has led to a decline in cotton prices, forcing CCI to sell its old stock by continuously reducing prices. Based on the MSP for cotton set for the current season, CCI's cotton procurement cost is expected to be around ₹61,000 per bale. Market prices are hovering around ₹51,000 to ₹52,000 per bale. The cost of imported cotton into the country is also in this range.

According to information received by Rural Voice, CCI has approximately 2.3 million bales of cotton that have been sold but have not been lifted. About two-thirds of this quantity is cotton purchased by traders. Furthermore, CCI has an unsold stock of approximately 1.3 million bales of cotton. Therefore, it must sell it at the prevailing market price of ₹51,000 to ₹52 per bale. To purchase new cotton, they will have to clear their old stock.

There are also speculations that ginning mills have created a cartel and increased ginning rates, delaying the signing of contracts with the Cotton Corporation of India (CCI). However, farmers are bearing the brunt of this situation. Currently, the arrival of the new crop has begun in North India and Western India, including Rajasthan, Punjab, Haryana, and Gujarat. 80 to 90 thousand bales of cotton are arriving in the markets daily. The price of cotton in the markets of Rajasthan, Punjab, and Haryana is hovering between ₹6,500 and ₹7,000 per quintal. However, for the current marketing season, the central government has fixed the MSP for long-staple cotton at ₹8,110 per quintal. This variety accounts for the majority of cotton production in the country.

Importantly, cotton production in the country is continuously declining. This year, cotton acreage has decreased by approximately one million hectares. Farmers are suffering losses not only due to diseases and pest attacks but also because of low price realisation for their cotton. Cotton production, which had reached 398 lakh bales in 2013-14, has declined to 306 lakh bales in the current year. Interestingly, the cotton industry, which had been advocating for cotton imports, had previously reported lower production but is now reporting an increase.

Sources indicate that traders may attempt to recycle cotton purchased below the MSP and sell it at MSP-based prices to the CCI. According to trade sources, more than 40 lakh bales of duty-free imported cotton have already arrived, and this number may reach 50 lakh bales by December 31, 2025. Duty-free cotton imports have already forced the CCI to sell old stock at a loss. With the purchase cost of new cotton being around ₹61,000 per bale, traders are expected to take advantage of the situation, and the government may incur losses due to the CCI selling cotton at lower prices. In effect, the decision to import duty-free cotton is proving detrimental to both farmers and the government.