As part of efforts to raise the incomes of farmers, the Indian Government recently announced a 7 per cent hike in the Minimum Support Price (MSP) for cotton for the 2025–26 crop season, which will run from October 2025 to September 2026. As per the changed format, the MSP of long-staple cotton goes up from Rs. 7,521 to Rs. 8,110 per quintal and medium-staple cotton from Rs. 7,121 to Rs. 7,710 per quintal.
Although the hike is expected to bring better returns to cotton farmers, it has raised alarm throughout the textile value chain. Top industry officials sound a warning that the increased procurement prices have the potential to cascade into the industry, raising costs and undermining India’s competitiveness in export garment markets.
India’s textiles industry — a prime job driver — involves yarn spinning, fabric processing, and garment manufacturing, with the latter having the greatest number of employees. Notably, cotton garments contribute over half of India’s garment exports, rendering the revision of MSP particularly meaningful.
Confederation of Indian Textile Industry (CITI) has raised the alarm at the increasing difference between overseas and domestic cotton prices. Sanjay Jain, a former president of CITI, warned that if the gap keeps widening into the next season, Indian garment exports will lose market to nations such as Bangladesh, Vietnam, Cambodia, and China, where low input costs allow for more competitive pricing.
Gujarat and Punjab manufacturers’ estimates indicate cotton apparel prices may increase by as much as 5 per cent due to higher raw material costs driving yarn and fabric prices. Although producers might ease the impact by cutting margins, the aggregate impact would still test export sustainability in an already margin-conscious world market.
The policy change reflects a subtle balance — raising farmer revenues without compromising the competitiveness of an economy that supports millions of livelihoods and a large proportion of India’s global export earnings.
