Cotton: World Markets and Trade

United States Department of Agriculture Foreign Agricultural Service

August 2026

Temporary Removal of Tariffs Pushes India Cotton Imports and Consumption to Record Levels

FIGURE 1

India cotton imports are forecast at a record 4.8 million bales in 2025/26 (August 2025 – July 2026) and 3.0 million bales in 2026/27 – tied for the second-highest volume on record. India’s government removed duties on all imported cotton for more than 6 months in 2025/26 and for the first 3 months of 2026/27 to support the domestic textile industry. As a result of this policy and other supportive measures, Indian cotton consumption is forecast at a record 26.5 million bales in 2026/27, up from 26.0 million bales in 2025/26. The previous record of 26.0 million bales was reached in 2020/21 in the rebound from COVID-19 closures in the previous marketing year. For the past 20 years, India has generally been a net exporter of cotton. However, the government consistently raised the minimum support price (MSP) for seed cotton despite lower global cotton prices in recent years. The higher MSP limited the competitiveness of exports and made imported cotton more cost effective for spinning mills. Even when global cotton prices rose this spring, the spot price in India remained above international prices.  Imports were further incentivized by the temporary removal of duties on imported cotton from all origins and varieties from August 19 to December 31, 2025 and from June 1 to October 30, 2026. Imported cotton usually faces an 11 percent duty with exceptions for extra-long staple (ELS) cotton, a tariff-rate quota for Australia, and lower tariffs for least-developed countries (LDCs).1 The government of India announced the temporary removal of duties to provide cheaper raw materials to the textile industry as it faced higher tariffs on exports to the United States last year and amid elevated energy costs this year. While this policy resulted in record imports in 2025/26, imports are forecast to decline by 1.8 million bales in 2026/27 as the tariff holiday expires after the first 3 months of the marketing year and a lower global cotton supply is expected to raise international prices, reducing the gap with India’s domestic prices. As India’s cotton imports increased, the composition of cotton imports shifted as well. Traditionally, a large portion of India’s cotton imports were ELS varieties from Egypt and the United States as consumers demanded products made from these premium varieties. However, in the past 2 years, India significantly increased imports of upland cotton in response to high domestic prices and the temporary tariff removal. U.S. Export Sales Reporting shows a similar trend as shipments to India grew nearly 40 percent in 2025/26 with almost all the increase coming from upland cotton.

FIGURE 2

Note: “Upland cotton” is cotton with a staple length of 27-32mm (Harmonized System (HS) code 52010024); “ELS Cotton” is cotton exceeding 32mm (HS code 52010025); “Other cotton” represents all other HS codes within 5201. Source: Trade Data Monitor, LLC.

India cotton consumption growth is fueled by cotton yarn demand from China and cotton product demand from developed countries. India’s cotton yarn exports to all markets rose 8 percent so far this marketing year as a sharp rise in exports to China was partially offset by a reduction in exports to Bangladesh. India’s cotton yarn exports to China tripled in the first 10 months of the marketing year and market share rose from 7 to 21 percent. China’s overall yarn imports increased over the same period, but India’s growth far exceeds that of other major suppliers as its exports benefited from a depreciating rupee and falling yarn prices.

FIGURE 3

India’s cotton product exports have fallen year to date but are expected to rebound on more supportive trade policies. Tariffs on goods from India entering the United States fell from 50 percent in the first half of the marketing year – one of the highest levels applied to any country – to a level that is comparable to those faced by other textile-producing countries. Additionally, in 2026, India implemented a trade agreement with the United Kingdom and announced free trade agreements with the European Union and New Zealand that are expected to be implemented within a year. All three of these agreements remove duties on cotton products. The United States, the European Union, and the United Kingdom account for three quarters of India’s cotton product exports, so improved market access for these countries is favorable for India’s textile industry and for demand for cotton.

2026/27 Outlook

Global production is forecast up nearly 400,000 bales to 117.6 million as larger crops in Brazil, Greece, and Turkey more than offset a smaller crop in the United States. Global consumption is forecast to rise nearly 1.0 million bales to reach a 6-year high of 122.9 million as higher consumption in China, India, Indonesia, and Vietnam more than offsets lower consumption in Bangladesh and Egypt. Global trade is projected up nearly 500,000 bales to 43.8 million on increased exports from Brazil, Greece, and Tajikistan. Higher import demand from India, Indonesia, and Vietnam more than offsets lower import demand from Bangladesh and Egypt. Global ending stocks are reduced more than 1.5 million bales to 69.7 million on lower inventories in China, India, Brazil, and the United States. The U.S. season-average farm price for 2026/27 is raised 2 cents to 75 cents per pound.

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2025/26 Outlook

 Production is forecast nearly unchanged at 122.0 million bales. Global consumption is forecast to rise over 900,000 bales to 120.9 million as higher consumption in China, India, Indonesia, and Vietnam more than offsets lower consumption in Bangladesh. Global exports are forecast over 700,000 bales higher to 45.6 million on increases in Azerbaijan, Brazil, Cote d’Ivoire, Greece, India, and Turkey. Higher China, India, Indonesia, Turkey, and Vietnam imports more than offset lower Bangladesh and Egypt imports. Global ending stocks are lowered more than 900,000 bales to 74.8 million as lower ending stocks in China, Brazil, Cote d’Ivoire, and India more than offset higher ending stocks in China. The U.S. season-average farm price for 2025/26 is lowered 1 cent to 61.5 cents per pound.

FIGURE 5

Futures and Spot Prices  Since the last WASDE report, cotton futures on the Intercontinental Exchange (ICE) have risen 3 cents to around 84 cents per pound

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Questions may be directed to: Stephanie Galbraith – Foreign Agricultural Service [email protected] Tony Halstead – Foreign Agricultural Service [email protected]