Cotton prices firm: End of import duty exemption, impact of Bangladesh tariffs?
By yash chouhan 2026-01-07 11:44:54
Cotton Prices: Cotton Prices Strengthen After Import Duty Exemption Ends; Will Bangladesh's Tariff Plans Have an Impact?
Cotton prices have improved in major markets across the country after the import duty exemption on raw cotton expired on December 31. According to trade sources, raw cotton prices have increased by Rs 400 to 500 per quintal in different markets. Despite this increase, prices still remain below the Minimum Support Price (MSP) of Rs 8,100 per quintal.
Meanwhile, a new concern is emerging for the Indian cotton and yarn market from Bangladesh. Bangladesh, which has been the largest buyer of Indian yarn for the past few years, is now considering imposing tariffs on imports to protect its domestic yarn producers. The Bangladesh Trade and Tariff Commission recently discussed a proposal to impose a 20 percent duty on yarn imports in a meeting, although no official announcement has been made yet.
Apprehension of Impact on Indian Yarn Exports
According to Atul Ganatra, former president of the Cotton Association of India, if Bangladesh imposes a duty on yarn imports, it will directly impact India's domestic yarn market. India exports approximately 30 percent of its total yarn production, while domestic consumption accounts for about 70 percent. Bangladesh is a major importer of Indian yarn, and a tariff there could reduce the competitiveness of Indian yarn. Trade sources believe that Bangladesh might impose a duty of between 10 and 20 percent. This would increase the landed cost of Indian yarn, making it more expensive in the Bangladeshi market.
Improvement in Domestic Market Prices
After the expiry of the import duty exemption, prices have increased in several cotton-producing regions of the country. According to Ramanuj Das Boobh, a sourcing agent from Raichur, raw cotton prices have risen to Rs 8,000 per quintal, compared to around Rs 7,500-7,600 a week ago. Meanwhile, pressed cotton prices have also increased by ₹1,000 to ₹1,500 per candy (356 kg). He said this is an opportune time for the Cotton Corporation of India (CCI) to announce the price for the 2025-26 crop, as any delay could lead mills to enter into more import contracts.
Procurement and Stock Situation
The government agency, Cotton Corporation of India (CCI), is actively procuring cotton at the Minimum Support Price (MSP) and has so far purchased over 68 lakh bales. Prices have also increased by ₹400–500 per quintal in the Khandesh region of Maharashtra. According to Pradeep Jain, founder president of the Khandesh Gin Press Factory Owners Association, approximately 40 percent of the crop in the region has arrived in the markets, while the remaining crop is being held back by farmers, and harvesting is complete.
2024-25 Crop Almost Sold Out
Akola-based broker Arun Khetan said that the CCI has sold almost the entire 2024-25 season's crop and now has less than three lakh bales in stock. The market expects the CCI to announce a price of around ₹57,000 per candy for the 2025-26 crop.
