The Indian government has elevated cotton purchase prices by more than 7 percent for the
upcoming 2024-25 marketing season. The Union Cabinet, chaired by Prime Minister
Narendra Modi, approved the increase in Minimum Support Prices (MSP) for all mandated
Kharif crops this season. Sources within the Indian textile industry expect this will raise
production costs throughout the value chain.
According to a government press release, the MSP for medium staple cotton has been
increased to ₹7,121 (~$85.36) per quintal from ₹6,620 per quintal last year, marking a ₹501
per quintal rise. Similarly, the government’s nodal agency, the Cotton Corporation of India
(CCI), will purchase long staple cotton at the new MSP of ₹7,521 (~$90.15) per quintal,
which is ₹501 higher than the previous MSP of ₹7,020 per quintal. Therefore, the
government has hiked the MSP by 7.56 percent for medium staple and 7.13 percent for long
staple cotton.
Industry sources predict that the increase in MSP will drive up production costs, as ginners
and spinners will face higher cotton prices. The market price of cotton is expected to remain
above the MSP level. However, opinions are divided on whether spinners, as well as fabric
and garment manufacturers, will be able to pass these increased production costs on to their
buyers, given the sluggish global demand.
