Govt weighs export floor price for cotton yarn to ensure domestic supplies

Cotton yarn prices have surged around 60%, from about ₹250 per kg in early 2026 to nearly ₹400 per kg now, putting pressure on textile manufacturers, particularly those that use yarn to produce fabrics and garments, per the industry proposal submitted to the textiles ministry and reviewed by Mint.

New Delhi: In a first, the government is vetting a proposal to levy a minimum export price (MEP) on cotton yarn to ensure local availability and protect domestic textile manufacturers from a sharp rise in raw-material costs, two people aware of the matter said.

The move comes against the backdrop of a surge in cotton yarn prices following US restrictions on cotton originating from China’s Xinjiang region, where Washington alleges that Uyghurs and other ethnic minorities are subjected to forced labour.

Cotton yarn prices have surged around 60%, from about ₹250 per kg in early 2026 to nearly ₹400 per kg now, putting pressure on textile manufacturers, particularly those that use yarn to produce fabrics and garments, according to the industry proposal submitted to the textiles ministry and reviewed by Mint.

“The textiles ministry is vetting proposals from the industry, which has expressed concerns over rising cotton yarn prices. We are in discussions with apparel manufacturers who are preparing to meet delivery deadlines for upcoming orders,” said the first of the two persons cited earlier, both speaking on condition of anonymity.

“The price increase has been attributed by industry representatives to supply-side constraints and rising overseas demand,” said an industry executive, who wished not to be named.

Amid declining production

The price pressure comes against the backdrop of declining cotton production in India. India is the second-largest cotton producer globally, with output estimated at 290.91 lakh bales in 2025-26, according to the ministry of textiles. One bale of cotton weighs 170 kg.

“Levying an MEP on cotton yarn is under discussion. Keeping Indian garment exporters cost-competitive is a government priority, and the government is keeping a close watch on cotton yarn prices,” said the second person.

“The government has not yet indicated a possible MEP level for cotton yarn,” this person clarified.

The move assumes significance as cotton production has declined sharply from 325.22 lakh bales in 2023-24 to 297.24 lakh bales in 2024-25 and further to 290.91 lakh bales in 2025-26, according to ministry of textiles data. The area under cotton also fell from 126.88 lakh hectares in 2023-24 to 114.84 lakh hectares in 2024-25 and remained broadly unchanged at 114.82 lakh hectares in 2025-26.

Latest available export data suggest that overseas shipments of cotton yarn have also risen sharply this year. Exports increased 11.9% year-on-year to 98,046 tonnes in April, 22.6% to 1,02,951 tonnes in May, 15.8% to 96,661 tonnes in June and 34.1% to 1,15,021 tonnes in July, according to the Cotton Association of India.

Queries sent on 5 October to the textiles secretary and spokesperson of the ministry remained unanswered till press time.

A minimum export price is essentially a floor below which a product cannot be exported. Before imposing an MEP, the government considers factors such as domestic prices, availability, production and the need to augment domestic supplies. The proposal is typically brought by the concerned line ministry, which in this case is the ministry of textiles.

Major raw material

Cotton remains a major raw material for India’s textile and apparel industry, with cotton-based products accounting for 41.2% of domestic textile and clothing demand in 2024, according to a ministry of textiles survey.

Experts are of the view that the government must take appropriate action to safeguard the interests of domestic manufacturers.

“We are now preparing for the summer season, and the sourcing of yarn and other raw materials is under way. As prices continue to rise, the cost competitiveness of Indian garments would naturally be affected,” said Rahul Mehta, chief mentor, Clothing Manufacturers Association of India (CMAI).

The government has used MEPs to regulate exports during periods of domestic price or supply pressures. It imposed a $1,200-per-tonne MEP on basmati rice in August 2023, later reduced it to $950 per tonne before removing it in September 2024. It also imposed a $550-per-tonne MEP on onion exports in May 2024, which was removed in September 2024. More recently, the government has used an MEP on natural honey, extending the measure through December 2025 notification.

However, in the petroleum sector, the government has used export levies rather than an MEP to discourage overseas shipments and prioritise domestic energy availability.

‘Temporary solution’

Some experts called an MEP a temporary solution and instead favoured measures to increase cotton acreage and production, while supporting the industry and exports.

“Coming out with an MEP plan is a temporary solution. We have to align our capacity and production right from cotton procurement,” said Raja M. Shanmugam, former president of the Tirupur Exporters' Association (TEA).

“The Cotton Corporation of India (CCI) is procuring cotton and acting as a trader, but it should act as a facilitator. The CCI’s objective should be to support both industry and farmers and create a win-win situation. Cotton acreage needs to be increased and production needs to grow, rather than acting on knee-jerk reactions. This situation will come and go. We have to create a framework that would generate real export growth in cotton yarn. The well-being of all stakeholders needs to be taken into account, with facilitation for both farmers and industry,” Shanmugam said.

The MEP proposal also comes against the backdrop of a 1.2% decline in India’s apparel exports to $15.81 billion in FY26 from $16.01 billion in FY25, according to the Directorate General of Foreign Trade (DGFT) data. The decline adds to the pressure on Indian garment exporters to remain competitive in global markets, particularly as higher cotton yarn prices raise input costs for apparel manufacturers.

About the Author

Dhirendra Kumar is a seasoned policy reporter with about 20 years of experience in deep, on-ground reporting across key economic and governance sectors. His work spans finance, public expenditure, disinvestment, public sector enterprises, textiles, trade, consumer affairs, and agriculture, with a strong focus on uncovering structural policy shifts and their real-world impact.<br><br>Kumar has been awarded the Chaudhary Charan Singh Award for Excellence in Journalism in Agricultural Research and Development, recognising his contribution to reporting on critical issues in the farm sector. He has also been a recipient of a fellowship in international trade from the National Press Foundation, which has further strengthened his coverage of global trade dynamics and their implications for India.<br><br>Kumar is known for breaking complex policy developments into clear, accessible stories. His reporting focuses on uncovering under-reported trends, explaining policy shifts, and helping readers stay informed about developments that shape India’s economic landscape.