★ India’s cotton production in the cotton year 2026 (October 2025 to September 2026) is estimated to decline by 1.7 per cent to 29.2 million bales, marking the lowest level in the past decade, according to a report by ICRA.

★ The decline in output is attributed to a reduction in cotton acreage, water scarcity, uneven monsoon conditions, and farmers shifting to more profitable crops. While yield per hectare has registered a modest year-on-year increase of 1.8 per cent, this improvement is not sufficient to offset the sharp fall in cultivated area. Compared with the peak levels seen in 2021, cotton acreage has declined by nearly 20 per cent.

★ Domestic cotton consumption in 2026 is expected to remain largely flat. Demand from the textile sector could face pressure due to tariffs imposed by the United States on Indian apparel exports, which may further dampen incentives for higher cotton production.

★ Due to lower domestic availability, India’s dependence on cotton imports has increased. In the first five months of FY2026, cotton imports rose by 85 per cent to 1.5 million bales. The United States emerged as the largest supplier, accounting for 22 per cent of total imports. While temporary import duty exemptions helped maintain supply, they also exerted pressure on domestic cotton prices.

★ The softness in cotton prices has impacted the textile and yarn industry. In November 2025, domestic cotton fibre prices declined by 3 per cent, while average cotton yarn prices fell by 4 per cent. This led to a contraction in margins for spinning mills. ICRA expects industry margins to remain within a limited range during FY2026.