Declining Cotton Supply to Drive Demand for Man-Made Fibers: Nuvama
New Delhi: The continuous decline in India's cotton surplus is putting pressure on raw material availability for the textile industry. Consequently, demand for man-made fibers (MMF) is expected to rise in the coming years, likely accelerating investment and capacity expansion in this sector. This projection is made in a report by Nuvama Institutional Equities.
According to the report, India's cotton market is shifting from a surplus position towards balanced supply. Cotton production is estimated to drop from 6.31 billion kg in the 2021 cotton season (CS) to approximately 4.95 billion kg in CS26. Meanwhile, cotton imports have risen from 0.26 billion kg to nearly 0.80 billion kg during the same period.
Conversely, a sharp decline has been recorded in cotton exports. Exports are projected to fall from 1.28 billion kg in CS21 to around 0.20 billion kg in CS26. The report attributes the increased supply pressure in the cotton market to limited domestic availability and shifts in global demand.
This shift has also impacted cotton prices. Prices for Shankar-6 cotton surged from ₹110 per kg in CS21 to ₹221 per kg in CS23. Although prices subsequently moderated to around ₹155 per kg, India's traditional price advantage has significantly eroded.
Nuvama noted that the global cotton trade is also undergoing changes. Spinning mills in Bangladesh have emerged as major buyers of Indian raw cotton, while India is increasing imports of superior-quality staple cotton from the US and Australia due to insufficient domestic production.
The report states that the margin regarding raw material availability for the spinning industry is steadily shrinking. Spinners may face increased margin pressure during years with poor harvests. However, for the textile industry, this shift could boost MMF-based production, and companies will need to diversify their fiber blends.
According to Nuvama, India has long been a surplus producer offering cotton at prices 8–11% lower than the global market, but this competitive advantage has now largely eroded. The report notes that the parity between domestic and global cotton prices in FY26 has been primarily due to a temporary waiver of import duties.
According to the report, the import duty waiver has been extended for a limited period. Nuvama believes this situation indicates that the government's primary focus has been on supporting farmers' incomes; meanwhile, to enhance their competitiveness, textile mills will need to shift towards alternative fiber sources.
read more :- Cotton Sowing Tops 103.54 Lakh Ha
