Cotton supply squeeze strengthens case for man-made fibres, says Nuvama

India’s cotton production is estimated to fall from 6.31 billion kg in CS21 to 4.95 billion kg in CS26, lifting import dependence and pressuring spinner margins. Nuvama says temporary duty relief through October 2026 does little to alter the longer-term shift toward man-made fibres.

— Source publishedMon, 3 Aug, 2026, 12:53 IST·First seen Mon, 3 Aug, 2026, 12:56 IST·Source BL · Consumer & Economy

What happened

retail-company · Nuvama says India’s shrinking cotton surplus and higher import dependence are squeezing spinner margins and strengthening the case for man-made

Key facts

  • India cotton production: 6.31 billion kg in CS21 to estimated 4.95 billion kg in CS26
  • Cotton imports: 0.26 billion kg to 0.80 billion kg
  • Cotton exports: 1.28 billion kg to 0.20 billion kg
  • Shankar-6 cotton: ₹110/kg in CS21, ₹221/kg in CS23, around ₹155/kg currently
  • Historical domestic cotton discount to global prices: 8-11%
  • Duty exemption period: June 1-October 31, 2026

Why this matters

Strategic buyers should prioritize partnerships or acquisitions in man-made fibres, recycling and blended-yarn capacity to secure alternatives to increasingly import-dependent Indian cotton.

What to watch

  • India cotton acreage, monsoon progress, yield estimates and Cotton Association production revisions.
  • Domestic cotton prices versus ICE/global benchmarks, including whether domestic prices retain a premium after import-duty relief.
  • Government decisions on cotton import duties beyond October 2026 and any changes to export, procurement or stock policies.
  • Monthly cotton import/export volumes and mill consumption data.
  • Yarn price increases, spinner utilisation rates and reported gross-margin pressure at textile manufacturers.
  • Retailer commentary on cotton apparel pricing, blend penetration, sourcing shifts and private-label gross margin.
  • Polyester and viscose price movements, since man-made-fibre substitution can shift cost pressure rather than eliminate it.
  • Rework FY27-FY28 fabric architecture toward cotton-polyester, cotton-viscose and recycled-polyester blends, especially in high-volume basics.
  • Lock in yarn and fabric capacity through seasonal or multi-season agreements, with indexed pricing and supplier diversification across India and import markets.
  • Audit cotton-heavy private-label categories for weight, construction, pack-size and trim changes that preserve entry price points.
  • Build separate pricing and margin plans for cotton-intensive categories rather than applying broad apparel price increases.
  • Increase sourcing capability for man-made-fibre fabrics and test customer acceptance of blend claims, hand-feel and durability.
  • Monitor supplier credit stress among spinners and smaller garment vendors as cotton working-capital needs rise.

Also reported by