Surging prices of Cotton is squeezing the margins of spinning industry. The raw material has become expensive due to poor Cotton crops in Gujarat and Maharashtra. Besides, the Cotton prices in the northern states such as Haryana and Punjab are trading Rs 200-400 above the minimum support price (MSP) in the ongoing procurement season.

According to the industry, the MSP of Cotton is higher by 26-28% in this season depending on the quality.

High prices, coupled with high input costs, have impacted the small and medium players in the northern region the most as compared to spinning units located in the western region where the respective state governments provide subsidies.

Millers in the western region, especially Maharashtra and Gujarat, enjoy certain incentives in terms of interest subsidy on bank loans and cheap power, which is not available in Punjab , at the current prices, India’s Cotton exports, especially from Punjab, will be uncompetitive.

According to experts, domestic prices of Cotton have gone up because of high prices in the international market. Further, this year there is a fear of a decline in domestic Cotton crops. Meanwhile, mills are buying Cotton for their short-term needs and expecting arrivals to pick up and prices to stabilise. The Cotton Advisory Board has estimated a production of 36.1 million bales in 2018-19. It expects an import of 1.5 million bales of Cotton.