Nov 22 (Reuters) - India's cotton prices are likely to fall this week on surging arrivals in spot markets and on lesser demand from exporters.

Fresh crop arrivals in spot markets are touching 100,000 bales of 170 kg per day and are expected to rise sharply in the next few days though its lower then the last year's figure, data from state-run Cotton Corporation of India showed.

Cotton arrivals in India's spot markets till Nov. 20 in the 2011/12 season fell 25 percent on year to 3.5 million bales of 170 kg each, data showed.

"Besides rising arrivals, lesser demand from China could also put pressure on the prices," said Arunbhai Dalal, a trader based in Rajkot in the western state of Gujarat.

Fibre prices in India are likely to fall substantially in the next two months as the biggest importer, China, cuts orders at a time when domestic supplies are set to peak and Indian buyers remain on the sidelines as demand for yarn is weak.

On Monday, the most traded Shankar-6 variety fell 300 rupees to 37,200 rupees per candy, data from the trade body Cotton Association of India showed.

Prices in India had hit a record high of 61,700 rupees per candy in March, tracking global prices that rose to an all-time high of $2.27 per lb as adverse weather conditions in key growing areas disrupted supplies.

India extended unrestricted cotton exports in the new marketing year after a sharp fall in prices in both domestic and overseas markets and increased supply view on projected record harvest in 2011/12 season.

The country is expected to ship nearly 8 million bales in the current cotton year, which began on Oct.1.