India's textile sector stands at a delicate equilibrium. On one hand, cotton sowing area fell 5.96% year-on-year to 9.253 million hectares as of July 17, according to the Ministry of Agriculture's latest weekly report, a figure that directly impacts the entire supply chain. On the other hand, the rainfall uncertainty brought by El Niño could prove to be a pivotal variable that reverses the trend. For buyers and mills, this means short-term price stability but lingering long-term risks.
Sowing Divergence Reveals Industry Logic
The decline in sowing area is not uniform but shows distinct regional divergence. Maharashtra, India's largest cotton-producing state, saw a 6.82% drop to 3.421 million hectares, while Gujarat plunged 9.76% to 1.675 million hectares. These two states alone dragged down the national figure. In contrast, Telangana and Andhra Pradesh recorded gains of 6.62% and 34.2% respectively, partially offsetting the decline. This divergence reflects farmers' strategic choices in the face of climate uncertainty—cotton's drought tolerance makes it a preferred option in low-rainfall years.
From a broader perspective, India's cotton output has declined for two consecutive years, from 33.66 million bales in 2022/23 to 29.024 million bales in 2025/26. The shrinking domestic supply has increased import dependence. Raw cotton imports surged 54.9% year-on-year to $1.89 billion in 2025/26, while exports fell 33.9% to $436.37 million. This data clearly indicates that India is shifting from a net exporter to a net importer of cotton, making it more sensitive to global market fluctuations.
Policy and Climate: Dual Variables for Price Outlook
The Indian government has suspended the roughly 11% cotton import tariff until October 2026. This policy directly reduces raw material costs for textile manufacturers and plays a key role in curbing textile price increases in the short term. L.K. Gupta, Chairman and Managing Director of the Cotton Corporation of India (CCI), stated that CCI is working to supply cotton directly to manufacturers rather than traders, aiming to control prices and protect farmers' interests. This disintermediation helps reduce speculative market disturbances.
However, the global risks posed by El Niño cannot be ignored. Raja M. Shanmugam, former President of the Tirupur Exporters' Association, pointed out that if major producing countries experience production declines due to climate anomalies, global cotton supply could be disrupted, putting upward pressure on raw material prices. This means that while domestic policies provide a short-term cushion, buyers must still remain vigilant. For mills dependent on Indian cotton, building buffer stocks and diversifying sourcing channels will be key strategies in the coming months.
Farmer Perspective: Low Rainfall May Boost Cotton Planting
Feedback from farmers in cotton-producing states further supports industry optimism. Ishvar Bhai Chavda, a cotton farmer in Gujarat's Morbi region, said that when rainfall is insufficient, farmers tend to plant cotton because of its drought tolerance compared to crops like soybeans. Ganesh Nanote, a farmer from Maharashtra's Vidarbha region, noted that timely but light rainfall is beneficial for cotton, and farmers who previously planted soybeans may switch to cotton. These micro-level planting decisions are driving the expected recovery in sowing area.
Industry executives generally believe that the sowing season is still in its early stages and the area gap is likely to narrow in the coming weeks. An executive from a leading textile company said that planting is accelerating and there is no need for excessive concern over production. This assessment is based on historical experience: in El Niño years, cotton planting area often increases rather than decreases as farmers proactively adjust crop mixes.