US Cotton Surges 40%! Vinay Kotak Urges: "Remove the 11% Duty, or Exports Face a Major Threat"
In an exclusive interview with CNBC Awaaz, Vinay Kotak, President of the Cotton Association of India, stated that US ICE cotton futures have witnessed a surge of approximately 40% over the last month and a half. According to him, the primary catalyst for this rally was the presence of a significant "short position" of nearly 10 million bales in the market. As global geopolitical tensions escalated and crude oil prices surged by roughly 40%, large-scale short covering commenced; this created immense buying pressure in the market, driving cotton futures sharply upward.
He noted that prices are currently encountering some resistance at their prevailing levels. Yarn prices, too—which had previously risen from 30 CCH to reach nearly ₹325—have now retreated to around ₹310, marking a decline of approximately 4–5% in recent days. He believes that these elevated prices are leading to "demand destruction," and the market will find it difficult to sustain—or "absorb"—these price levels over the long term.
However, he also added that spinning mills remain profitable at current levels, even though their profit margins have narrowed compared to earlier periods. Consequently, he does not anticipate a drastic decline in raw cotton prices.
Addressing the issue of import duties, Vinay Kotak explained that India primarily imports cotton across three categories, with a particularly strong demand for Extra Long Staple (ELS) cotton and contamination-free cotton. He argued that if the 11% import duty remains in force, it will become increasingly difficult for Indian textile exporters to compete with counterparts in countries such as Bangladesh, Indonesia, China, and Vietnam—a situation that could ultimately jeopardize India's global share of textile exports.
He asserted that removing this duty would provide a significant boost to the country's value-added textile exports. With this in mind, the Cotton Association of India has requested the government to waive the 11% import duty for the period spanning from April to October.
They clarified that by March, approximately 90% of the farmers' cotton produce has already been sold, with only about 10% of the stock being retained by a few farmers. Consequently, removing the duty would not result in any significant loss for the farmers. Furthermore, farmers benefit from the protection of the government's Minimum Support Price (MSP), which has been hiked by approximately 7% this year.
According to Vinay Kotak, neither consumers nor the textile industry are currently receiving any form of protection. Under these circumstances, waiving the 11% duty during the lean period from April to October would be in the best interest of both the industry and the consumers. He further noted that the Ministry of Textiles and the Cotton Corporation of India also concur regarding the necessity of this measure.
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