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India's cotton imports are forecasted to increase to 25 lakh bales for the new season starting October 1, up from 17.5 lakh bales last year, as per the Cotton Association of India (CAI). Meanwhile, exports are expected to drop to 18 lakh bales, down from 28.5 lakh bales a year ago. This shift, driven by lower domestic output, is raising concerns for both India's textile industry and global markets, given the country's significant role as a cotton producer and exporter.

Unseasonal rains have damaged crops in key cotton-growing regions, reducing yields and negatively impacting quality. Farmers in many areas have shifted to more profitable or less water-intensive crops, such as groundnut and rice, leading to a 10 percent reduction in the area under cotton cultivation, from 126.9 lakh hectares last year to 112.9 lakh hectares this season.

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The reduced cotton output is expected to lead to higher domestic prices, affecting the textile sector that relies heavily on cotton as a raw material. Globally, reduced cotton supply from India may impact trade flows and prices. The unseasonal rains have also caused discoloration and damaged the standing cotton crop, leading to concerns about low prices for farmers. The delayed cotton picking season, which usually starts in mid-September, has further compounded the issue.

The first round of picking has been completed, and the second is in progress, but damage from the rain has affected the quality of the newly harvested crop. The rains have reduced quality, resulting in suppressed cotton prices in the spot market. India's cotton production for the 2024-25 season is expected to decline by 7 percent, falling to 302 lakh bales, as a result of the decrease in cultivation area and crop damage due to excessive rainfall.