MSME Briefing Bureau

Idle mills, fibre shifts and import dependence reshape Indian textiles

India’s cotton crisis is no longer just an agricultural problem or a question of rising raw-material prices. It is exposing a capacity paradox: ginning factories need domestic kapas, spinning mills need competitively priced lint, and garment manufacturers need affordable yarn. Meanwhile, man-made and blended textiles already command a larger share of household textile demand by value. As imports rise and domestic production struggles, India’s traditional cotton-based textile model faces a difficult question: what happens next?

India’s textile industry is approaching a structural crossroads. Domestic cotton production has weakened over successive seasons, imports have increased sharply, and manufacturers are finding it increasingly difficult to plan procurement and production with confidence. The pressure is being felt across the value chain—from cotton farmers and ginners to spinning mills, fabric manufacturers and garment exporters.

But the more consequential development may be taking place beyond the cotton market itself.

India has a large installed cotton-processing base, yet the availability of domestic kapas is becoming less predictable. At the same time, man-made and blended fibres already occupy a substantial share of household textile demand.

If this continues, the consequences will extend beyond higher cotton prices. Ginning capacity could remain underutilised, spinning mills could face uneven operating economics, pure-cotton clothing could become more expensive, and polyester and viscose could gain further ground.

The question is whether this is another difficult cotton season or the beginning of a change in the economics of India’s textile industry.

Domestic cotton production: The supply gap is widening

India’s cotton production has declined over successive seasons.

According to the Ministry of Textiles’ provisional figures, production fell from 325.22 lakh bales in 2023–24 to 297.24 lakh bales in 2024–25 and approximately 292.15 lakh bales in 2025–26. Each Indian bale weighs 170 kg.

The Ministry’s cotton balance sheet for 2025–26 estimated domestic consumption at 322 lakh bales, comprising 213 lakh bales of non-MSME consumption, 93 lakh bales of MSME consumption and 16 lakh bales of non-textile consumption. It estimated imports at 40 lakh bales and closing stocks at 40.65 lakh bales.

The Cotton Association of India (CAI), however, has a substantially different assessment.

Following its Crop Committee meeting on 28 October 2026, CAI revised its estimate of 2025–26 cotton pressing to 325.69 lakh bales, against its earlier estimate of 339 lakh bales. It also revised imports upwards to 71.60 lakh bales and domestic consumption to 365 lakh bales.

CAI’s revised 2025–26 cotton balance sheet

Particulars	Lakh bales
Opening stock	55.59
Domestic pressing	325.69
Imports	71.60
Total supply	452.88
Domestic consumption	365.00
Exports	15.00
Closing stock	72.88

<text size=”xs” color=”secondary”>Source: CAI, crop assessment finalised on 28 October 2026. One bale = 170 kg.</text>

The difference between the Ministry’s provisional production estimate and CAI’s assessment is significant. Their figures should not be combined into a single balance sheet.

Nevertheless, the direction of the market is important. CAI’s revised estimate shows that India imported 71.60 lakh bales in 2025–26, against its earlier estimate of 62 lakh bales. Domestic consumption was also revised upwards to 365 lakh bales.

The government has recognised the importance of raw-material availability. Through Notification No. 35/2026-Customs dated 30 October 2026, it extended the exemption from Basic Customs Duty and Agriculture Infrastructure and Development Cess on eligible cotton imports until 31 December 2026.

The extension is intended to improve availability, ease input-cost pressures and support the textile and apparel industry.

However, an import-duty exemption is a short-term supply intervention. It does not resolve the underlying issue of domestic productivity, nor does it guarantee that imported cotton will always be available at commercially attractive prices.

Ginning factories: Installed capacity without enough domestic kapas?

The first industrial segment exposed to a change in cotton availability is ginning.

Ginning factories process kapas, separating lint from cottonseed. Their operations depend on the volume of seed cotton arriving from farmers, procurement prices, the duration of the season and the economics of processing.

India’s ginning infrastructure is substantial. A historical assessment of the cotton value chain by WTW estimated that Gujarat had around 800 ginning mills, with processing capacity of approximately 30 million bales. The same assessment estimated that Maharashtra processed around eight million bales of lint annually.

These are historical industry estimates, not a verified count of currently operational factories or their present installed capacity. Nevertheless, they illustrate the scale of investment that depends on domestic cotton arrivals.

More recent regional evidence shows how quickly the number of operating units can change during a season.

According to the Gujcot Trade Association’s February 2025 pressing report:

• In Saurashtra, 375 ginning factories were active, but only 312 remained operational by February. As many as 63 units had stopped operations.
• In North Gujarat, 159 factories were active, of which 137 were still operating in February. Twenty-two units had stopped operations.
• In the private sector, approximately 388 factories were operating and processed 7,53,504 running bales during February 2025.

This is useful evidence of seasonal underutilisation, but it needs to be interpreted correctly. The factories that stopped operating did not necessarily close permanently. Market disparities, the timing of kapas arrivals and procurement conditions also influenced their decisions.

The economic problem is straightforward. A ginning factory has invested in machinery, buildings, power connections and labour. When it processes fewer bales, its fixed costs are distributed over a smaller volume.

There is also an important distinction between ginning and spinning. Imported cotton lint can supply spinning mills directly, but it does not create processing work for domestic ginners. Therefore, rising imports may help keep spinning machines running without restoring the throughput of domestic ginning factories.

For Gujarat’s ginning industry, the central question is whether the volume of domestic kapas available in the coming season will justify the existing processing infrastructure.

A second consecutive season of widespread underutilisation should not be assumed without updated national and state-level operating data. But the 2024–25 Gujcot figures demonstrate that the capacity problem is not theoretical.

Spinning mills: A different capacity problem

The spinning industry faces a more complex challenge. Unlike ginners, spinning mills can use imported lint, but they must secure cotton of the right quality at a competitive landed cost.

India has a large spinning base, with an estimated 48 million installed spindles. However, installed capacity and actual operational capacity are not the same.

A June 2026 Motilal Oswal sector assessment estimated spinning capacity utilisation at approximately 65%, with around 11–13 million spindles non-operational.

This is an analyst estimate. It should not be interpreted as evidence that the entire idle capacity is the result of cotton shortages. Older machinery, high energy costs, weak productivity, financial stress and changing product economics also contribute.

The Ministry of Textiles’ reply to Parliament on 24 March 2026 provides another indication of the industry’s operating structure. Based on the Annual Survey of Industries, the state-wise number of spinning factories and those in operation during 2023–24 included:

State	Total factories	Factories in operation	Not operating
Gujarat	516	357	159
Maharashtra	522	357	165
Tamil Nadu	2,455	1,672	783

<text size=”xs” color=”secondary”>Source: Ministry of Textiles, parliamentary reply, 24 March 2026. The difference between total factories and operating factories is a factory count, not a measure of idle spindle capacity. It also does not establish that all non-operating units are permanently closed.</text>

The figures underline the scale of the challenge, particularly in Tamil Nadu, Gujarat and Maharashtra. But they also show why the industry needs better information: the number of factories operating does not tell us how many spindles are running or how much cotton each mill is consuming.

The cotton supply squeeze adds another layer of pressure.

Industry representatives in Tiruppur reported in September 2026 that cotton yarn prices had increased by more than ₹60–80 per kg during the year, depending on the yarn variety. Some reported increases of around 60% compared with the beginning of 2026. Exporters estimated that knitwear production costs had risen by as much as 15%.

For a spinning mill, higher cotton prices mean more than an increase in the raw-material bill. They also increase the amount of working capital required to maintain inventory.

A mill that cannot afford to purchase cotton in advance may have to procure more frequently at prevailing market prices. If yarn prices rise faster than the mill can revise customer quotations, margins come under pressure.

The competitive divide could widen between modern mills with efficient machinery, strong balance sheets and established import relationships, and older units operating with higher conversion costs and limited financial flexibility.

Pure-cotton clothing: Consumers may have to pay more

The increase in cotton and yarn prices is moving through the textile value chain.

The Tiruppur Exporters’ Association reported that rising yarn prices had increased knitwear production costs by up to 15% in September 2026. Exporters also said that international buyers were reluctant to accept the full increase, forcing manufacturers to absorb part of the additional cost.

This is an important warning, but it is not a forecast that retail clothing prices will rise by 15%.

The retail impact depends on the share of yarn and fabric in the finished garment, processing costs, labour, logistics, brand margins, retailer margins and inventory purchased before the price increase.

An illustrative calculation shows how the pressure can travel.

Assume yarn represents 30% of a garment’s manufacturing cost. If the yarn price rises by 60%, and the manufacturer uses the same quantity of yarn, the direct increase in manufacturing cost would be approximately 18%, assuming other costs remain unchanged and there is no substitution or inventory protection.

This is a sensitivity calculation, not an industry-wide price forecast. The actual impact will vary by garment, fabric construction and procurement contract.

The implications are nevertheless clear:

• 100% cotton garments: Manufacturers may have to raise prices, accept lower margins or reduce other costs.
• Cotton-polyester garments: Blending can offer a different cost and performance balance, depending on the product.
• Cotton-viscose products: These may provide alternatives in selected apparel and fabric categories.
• Export garments: Fixed-price contracts can delay the transfer of higher input costs to buyers.

Consumers should therefore be prepared for the possibility that pure-cotton garments become more expensive relative to some blended alternatives.

There is no reliable national estimate available at present that quantifies the exact retail-price increase for pure-cotton clothing in 2027. Any precise percentage would be misleading without a garment-level cost study.

The fibre transition: MMF and blended textiles already lead household demand

The most consequential structural development may be taking place in the consumer market.

The Ministry of Textiles’ Market for Textiles and Clothing: National Household Survey 2024, released in April 2026, provides an important indication of changing household demand.

Fibre category	Share of household textile demand by value
MMF and blended products	52.2%
Cotton-based products	41.2%
Silk-based products	5.2%
Wool-based products	1.3%

In monetary terms, household demand for MMF and blended products reached ₹4.47 lakh crore, compared with ₹3.53 lakh crore for cotton-based products.

These figures need careful interpretation. They measure household textile demand by value, not the physical volume of fibre consumed or the exact share of pure-cotton garments compared with cotton-polyester and cotton-viscose clothing.

The survey also reveals an interesting contrast. Between 2010 and 2024, cotton-based household textile demand grew at a compound annual growth rate of 10.53%, compared with 8.28% for MMF and blended products.

Therefore, cotton demand has not disappeared. It has grown substantially in value. But MMF and blended products already account for a larger share of the household textile market by value.

This is an important distinction for manufacturers. The industry is not moving towards a cotton-free future. It is moving towards a more diversified fibre market in which cotton competes with polyester, viscose and other man-made fibres across different product categories.

A prolonged cotton supply squeeze could accelerate that transition.

Who stands to gain from the shift towards man-made fibres?

The potential beneficiaries include manufacturers of polyester staple fibre (PSF), polyester filament yarn (PFY) and viscose staple fibre (VSF). However, each fibre serves different applications.

Polyester staple fibre (PSF) can be spun into yarn and blended with cotton. It is used in selected shirting, knitwear, uniforms and home-textile products.

Polyester filament yarn (PFY) serves a different market, including filament-based fabrics and applications. A rise in cotton-polyester blends does not automatically translate into an equivalent increase in PFY demand.

Viscose staple fibre (VSF) is used in spun yarns and blended fabrics. Its characteristics and applications differ from those of polyester.

If manufacturers increase the proportion of man-made fibres in suitable products, demand for PSF and VSF could benefit. PFY demand may also gain through a wider shift towards filament-based fabrics, but this needs to be examined separately.

Substitution is not automatic. A manufacturer cannot simply replace cotton with polyester or viscose without considering machinery, yarn specifications, fabric construction, dyeing, finishing, end-use performance and buyer approval.

The opportunity is therefore not merely to replace cotton. It is to develop a more flexible product portfolio and a better understanding of fibre economics.

India’s cotton import dependence: Who supplies the fibre?

India’s dependence on imported cotton has increased sharply.

According to the Ministry of Textiles, raw cotton imports rose from 5.62 lakh tonnes in 2024–25 to 10.13 lakh tonnes in 2025–26, an increase of approximately 80.3%.

A separate World Bank WITS/UN Comtrade dataset for calendar year 2025 provides a country-wise breakdown of India’s imports under HS 520100, covering cotton that is neither carded nor combed.

India’s raw cotton imports by origin — calendar year 2025

Country	Quantity (tonnes)	Import value (US$ million)
Brazil	2,79,534	471.1
Australia	2,34,542	414.1
United States	1,83,868	401.2
Mali	1,50,654	264.4
Egypt	25,170	84.0
Tanzania	35,815	61.8
Mexico	1,378	3.4
South Africa	1,255	2.2
Mozambique	1,096	1.7
Nigeria	550	0.85
Kazakhstan	407	0.72
Malawi	433	0.70
Ethiopia	323	0.50
Senegal	251	0.43

Total imports: 10.36 lakh tonnes, valued at approximately US$1.93 billion.

<text size=”xs” color=”secondary”>Source: World Bank WITS/UN Comtrade, HS 520100, calendar year 2025. Values are rounded. This is a calendar-year customs dataset, not the October–September cotton-season balance sheet or financial-year import data. The table lists selected major origins and is not an exhaustive list of all trading partners.</text>

Three countries—Brazil, Australia and the United States—supplied approximately 67% of India’s raw cotton imports by quantity in 2025. Mali was the fourth-largest supplier.

This concentration has commercial implications. Indian mills are exposed to crop conditions, export availability, freight costs and currency movements in a relatively small group of major sourcing countries.

The data also identifies alternative suppliers that deserve greater attention. Mali already supplied 1.51 lakh tonnes, while Tanzania supplied around 35,815 tonnes. Egypt, Burkina Faso, Côte d’Ivoire and other West African origins also warrant closer examination.

The opportunity is to diversify sourcing without compromising fibre quality, consistency or delivery reliability.

The global cotton market: Where is exportable supply available?

The USDA’s October 2026 outlook projects global cotton production of approximately 118 million 480-lb bales in 2026–27, against mill consumption of approximately 123.1 million bales.

Global ending stocks are forecast to fall by around five million bales to approximately 70.7 million 480-lb bales, the lowest level since 2011–12.

Global cotton exports are projected at approximately 44.7 million 480-lb bales. Brazil and the United States remain the two largest exporters.

For Indian buyers, the important question is not simply which country produces the most cotton. It is how much commercially available cotton can be exported, at what quality and at what landed cost.

Brazil: Brazil is a major global exporter and an increasingly important source for Indian mills. Its large export-oriented cotton sector makes it a key sourcing market. However, Indian buyers must monitor crop conditions, export commitments and freight availability.

United States: The US remains a major supplier with established export infrastructure and recognised quality specifications. Indian mills can examine different grades and staple characteristics, but the landed price and currency exposure remain important.

Australia: Australian cotton is an established source for quality-conscious buyers. However, the USDA’s October outlook indicates lower export availability in 2026–27 compared with the previous season. Buyers should not assume that Australia can expand supply indefinitely.

West Africa: Benin, Mali, Burkina Faso and Côte d’Ivoire deserve a more systematic place in India’s sourcing strategy. These countries already supply Indian importers, but the industry could explore longer-term relationships and better procurement arrangements.

The International Cotton Advisory Committee’s October 2026 outlook projects West African cotton exports of approximately 960,000 tonnes in 2026–27, around 6% higher than the previous year. This makes the region worth examining, although the projected exports are not necessarily uncommitted stocks available for Indian buyers.

The sourcing opportunity is not to replace Brazil, Australia and the United States, but to reduce excessive dependence on a limited number of origins.

China: The world’s largest cotton stockholder, but not necessarily a supplier

China holds close to half of global cotton ending stocks, according to USDA projections.

This may appear to offer a potential sourcing opportunity for India. However, China’s large stockpile is primarily linked to domestic production, mill consumption and government reserve policies. Cotton held in strategic reserves is not automatically available for export.

China remains a major cotton producer and consumer. Its reserve releases, import policy and domestic textile demand will influence the quantity of cotton available in international trade.

For Indian buyers, China is therefore more important as a determinant of global supply-demand conditions than as a dependable source of exportable cotton.

Pakistan: A cotton-producing country with its own supply pressures

Pakistan has historically been an important cotton producer, but its domestic output has faced serious challenges.

Declining acreage and production have increased the importance of imports for its own textile industry. Pakistan should therefore not be treated as a readily available source of surplus cotton for India.

The two countries’ cotton trade also needs to be examined in the context of trade restrictions, diplomatic relations and commercial payment arrangements.

The practical sourcing opportunity for Indian mills lies in strengthening procurement relationships with established exporters and exploring additional origins in Africa, rather than assuming that cotton held in neighbouring countries will be available.

Global competition: India is not the only buyer

India’s cotton procurement strategy must also account for competition from other textile-producing countries.

Bangladesh and Vietnam are significant importers of cotton. China remains a major consumer, while Pakistan’s textile industry also requires imported fibre.

The USDA’s October 2026 outlook projects global imports of approximately 44.7 million 480-lb bales in 2026–27. It expects imports by India and China to decline, while some other major importing countries increase their purchases.

This means that Indian mills will compete for exportable cotton with manufacturers elsewhere. The availability of global stocks does not guarantee that the required quality will be available at an attractive price or within the required delivery schedule.

The industry must therefore treat cotton sourcing as a strategic procurement function rather than a seasonal buying exercise.

Export competitiveness: Market access is not enough

India’s textile industry competes with Bangladesh, Vietnam, China, Turkey and other manufacturing centres.

Higher cotton and yarn prices can weaken the competitiveness of Indian spinning and garment manufacturers, particularly in basic products where international buyers can shift orders between suppliers.

The problem becomes more serious when exporters have accepted orders at fixed prices. If yarn prices rise after the order is confirmed, the manufacturer may have to absorb the increase until the next pricing cycle.

Tiruppur exporters reported production-cost increases of up to 15% in September 2026. Some manufacturers said international buyers were reluctant to accept higher prices, forcing exporters to absorb part of the increase.

This highlights an important business risk: a trade agreement may open a market, but it cannot compensate for an uncompetitive domestic cost structure.

Indian manufacturers must improve productivity, reduce conversion costs, strengthen procurement and move towards products where quality, delivery and technical capability offer advantages over price alone.

What should the industry do? Three commercially viable priorities

The response to the cotton crisis should not be limited to seeking cheaper imports or asking manufacturers to shift to man-made fibres. Each part of the value chain requires a commercially viable strategy.

1. Create a diversified cotton procurement network

Spinning mills should develop approved supplier panels across Brazil, Australia, the United States and selected West African countries.

Procurement decisions should compare landed cost, staple length, strength, micronaire, contamination, freight, insurance, delivery schedules, currency exposure and payment terms.

Smaller mills that cannot purchase large consignments should explore collective procurement through credible industry associations or buying consortia. Pooling requirements can improve bargaining power, reduce transaction costs and provide access to a wider supplier base.

Mills should also link procurement to confirmed orders and cash-flow capacity. Speculative stockpiling can create serious working-capital pressure when cotton prices or customer demand change.

2. Match installed capacity to reliable raw-material availability

Ginners and spinning mills should review their operating economics before investing in additional machinery.

Ginning units should examine actual kapas availability, procurement networks, processing costs, cottonseed realisation and operating days. Adding capacity without securing a reliable supply of kapas could increase fixed-cost pressure.

Spinning mills should assess spindle productivity, energy consumption, yarn realisation, operating margins and access to working capital. For older units, modernising inefficient machinery may be more viable than adding new spindles.

Where customer specifications permit, mills should evaluate blended-yarn production. But the decision must be supported by actual buyer demand, machinery compatibility and a cost comparison—not merely by the assumption that polyester or viscose will always be cheaper.

3. Make domestic cotton productivity the industry’s long-term priority

India cannot rely indefinitely on imports to address weaknesses in domestic cotton production.

The government’s Mission for Cotton Productivity, approved with an outlay of ₹5,659.22 crore for 2026–27 to 2030–31, aims to improve cotton productivity and quality.

The programme needs measurable outcomes: higher yield per hectare, better seed quality, effective pest management, timely extension services, improved agronomic practices and stronger farmer-market linkages.

The focus should be on increasing productivity rather than simply expanding acreage. Higher and more consistent output would benefit farmers, ginners, spinning mills and the wider textile value chain.

The government should also improve the reliability of cotton production, consumption and stock data. The significant difference between Ministry and CAI estimates makes it difficult for manufacturers to plan procurement and investment with confidence.

A credible national cotton balance sheet, updated regularly and using consistent definitions, would be an important economic tool for the entire industry.

India’s textile industry must prepare for a different cotton economy

The cotton crisis is exposing structural weaknesses across India’s textile value chain.

Ginning factories depend on domestic kapas arrivals. Spinning mills need suitable lint at a competitive landed cost. Garment manufacturers must protect margins while meeting buyer specifications. Exporters must compete with countries that may have more favourable input costs.

At the same time, the household textile market is already more diversified than the traditional image of an overwhelmingly cotton-based industry suggests. MMF and blended products account for 52.2% of household textile demand by value, compared with 41.2% for cotton-based products.

This does not mean cotton is losing its relevance. Cotton demand continues to grow. But the industry can no longer assume that domestic cotton will always be available in sufficient quantities at a cost that supports every existing manufacturing model.

For ginners, the priority is commercially viable throughput. For spinning mills, it is procurement discipline and productivity. For garment manufacturers, it is a more flexible fibre and product strategy. For consumers, it may mean higher prices for some pure-cotton products and a wider choice of blended alternatives.

India should neither abandon cotton nor continue adding processing capacity without examining raw-material availability and market demand.

The economically viable path is to raise domestic cotton productivity, diversify global sourcing, modernise inefficient manufacturing capacity and align fibre choices with actual customer requirements.

The next phase of India’s textile growth may not be defined by how much cotton the country can process, but by how efficiently it can combine cotton, man-made fibres, technology and global supply chains to remain competitive.

Sources: Ministry of Textiles, Government of India; Press Information Bureau; Cotton Association of India (CAI), crop assessment dated 28 October 2026; Gujcot Trade Association, February 2025 pressing report; Ministry of Textiles parliamentary reply on spinning mills, 24 March 2026; World Bank WITS/UN Comtrade, HS 520100, calendar year 2025; USDA Foreign Agricultural Service, Cotton and Wool Outlook, October 2026; International Cotton Advisory Committee (ICAC), October 2026; Confederation of Indian Textile Industry (CITI); Motilal Oswal sector research, June 2026; Apparel Export Promotion Council (AEPC); Tiruppur Exporters’ Association; and news agency reports.