As the rising minimum support price (MSP) every year poses a challenge to the cotton value chain, the trade has stressed the need to figure out an equitable solution which would help farmers get a remunerative price without hurting the competitiveness of the industry.

The Cotton Association of India (CAI), the apex trade body for the fibrecrop, is of the view schemes like Bhavantar (price deficiency payment scheme), should be considered for the cotton sector. In the price deficiency payment scheme, the difference between the MSP and the market price is paid directly to the farmer, when the market price is lower than MSP.

CAI’s views assumes significance as cotton prices have largely been bearish and ruled below the MSP during the current 2024-25 season, forcing the state-run Cotton Corporation of India (CCI) to purchase over 100 lakh bales at MSP.

Bearish market

At the recent CAI meeting, stakeholders representing the entire cotton trade and textile industry emphasised that increasing the Minimum Support Price (MSP) for cotton every year is causing problems. For the kharif 2025 season, cotton MSP has been increased to ₹7,710 per quintal for medium staple cotton, up from ₹7,121 last year. For long staple, the MSP has been increased to ₹8,110 from ₹7,521 . Market prices have been bearish, impacted by weak demand and weak trend in global prices.

“Higher MSPs not only distort market dynamism and hinder the natural price discovery process but also increase production cost for textile mills, leading to potentially higher prices for consumers and also adversely impact the competitiveness of Indian cotton production in the global market. As this poses threat to the survival of entire value chain, stakeholders exhorted the need for finding an equitable solution for the continue providing remunerative prices to the farmers but without compromising the competitiveness of the trade and industry,” CAI president Atul S Ganatra said in a statement.

“Several suggestions, including the need to introduce a Bhavantar-like scheme and also for making a few changes in the CCI’s sales policy, were given at the meeting,” Ganatra said.

Need for change

Suresh Kotak, Chairman of Textile Advisory Group and the Chairman of Kotak Group of Companies, who also attended the meeting acknowledged the need for making suitable changes in the MSP structure and also the CCI sales policy, CAI said. Kotak noted the suggestions and stated that he would take up the same suitably with the Government, the CAI statement said.

CAI stakeholders, based on the feed back from all the State associations, estimated the ongoing 2024-25 season at 301.15 lakh bales of 170 kgs each. Imports for the year are estimated to more than double to 39 lakh bales (15.20 lakh bales during 2023-24). Domestic demand during 2024-25 season is estimated at 305 lakh bales (313 lakh bales) and exports seen lower at 17 lakh bales (28.36 lakh bales).

CAI estimates the closing stocks for the current season 2024-25 higher at 48.34 lakh bales (30.19 lakh bales).

Published on June 20, 2025