India, the leading producer of cotton in the world, can use homegrown cotton in manufacturing and exporting value added products. But since it is a seasonal commodity, speculation leads to an artificial price rise. There has been a rise of 35 per cent in cotton prices in the last 80 days in India, whereas world cotton is available 23 per cent cheaper. The jump in cotton prices has resulted in higher input costs for the spinning sector in India. So the Cotton Corporation of India (CCI) will sell its existing stock purchased under minimum support price to medium and small spinning mills.

Cotton prices reached a high of Rs 35,000 per candy in May this year. The CCI buys cotton from farmers when rates go below the support prices. The opening balance is expected to be 43 lakh bales as on September 30, 2016. Steps are being taken to manage whitefly attack on cotton in the northern states. Cotton exports from India have nearly halted because of the rise in prices. This has forced key importers like Bangladesh, Pakistan and Vietnam to turn to other suppliers. The price rise could subsequently push up fabric and clothing prices and put pressure on the margins of garment makers.