India’s cotton crop has fallen by around 15 per cent this year mainly because cotton yields have drastically dropped. There were no rains last year in the month of August and September. Most farmers now want to take two or three crops and don’t want to keep cotton plants after December. States like Gujarat, Maharashtra, Telangana and Karnataka are facing a huge deficit of rains.

Many textile mills in North India and South India are planning to cut production due to a lack of demand as well as demand-supply imbalances which is severely going to impact margins. Spinning mills which are small do not have facilities to import cotton. That is severely going to affect the margins of the textile industry. The industry has been severely impacted by the US-China tariff war. China is a major importer and exporter of textile products. Logistics costs are about ten per cent of the total cost but they have to be incurred. But a lot of import is still going on.

Cotton prices around the world have come under pressure. In India, prices have dropped to Rs 44,000 a candy compared to Rs 47,000 just ten days ago. Globally, cotton prices are currently ruling at Rs 42,000 a candy.