Government procurement of cotton at MSP reaches close to 100 lakh bales

20-Jun-2025 04:09 PM

Mumbai. During the current 2024–25 cotton marketing season (October–September), the Cotton Corporation of India (CCI), under the Union Ministry of Textiles, procured nearly 100 lakh bales (each bale weighing 170 kg) of cotton from farmers at the minimum support price (MSP).

This was primarily due to weak demand from textile mills and subdued market prices. So far, CCI has successfully sold around 35 lakh bales in the domestic market.

According to the Chairman and Managing Director of CCI, over 500 procurement centres were opened in major cotton-producing states to ensure MSP procurement from farmers.

As the demand from cotton mills remained weak and market prices stayed below MSP despite lower domestic production, the agency had to intervene heavily. If prices continue to remain depressed, CCI may need to make significant purchases in the next season as well.

Official estimates suggest the total cost of cotton procurement under the price support scheme so far stands at around Rs. 37,500 crore (approximately $4.5 billion).

The burden may remain high if market conditions do not improve. For the 2025–26 marketing season, the government has raised the MSP of cotton by Rs.589 per quintal, an increase of nearly 8 percent.

The MSP for medium-staple cotton has risen from Rs. 7,121 to Rs. 7,710 per quintal, and for long-staple cotton from Rs. 7,521 to Rs. 8,110 per quintal.

Meanwhile, cotton imports have surged. In May 2025 alone, the volume of imported cotton increased by 133 percent compared to the same month last year, and the import bill during April–May 2025 rose by 131 percent.

Analysts say international cotton prices are currently about 8 percent lower than domestic prices. As a result, even with an 11 percent customs duty, imports remain profitable for Indian mills.

If CCI reduces its selling prices, millers may prefer to buy from domestic stock, which could slow down the pace of imports.