The indian cotton market, which appears to be stable, is already in the dark. The industrial advantage of the world's second-largest cotton-producing country, which is being continuously eroded by multiple topical shocks such as the obstruction of shipping in the straits of hormuz, the resumption of import tariffs and the surge in energy prices, has become normal, with factory shutdowns, production cuts and high costs, and once cotton “risk avoidance assets” labels having completely failed。
Texpro's latest data show that, since the holmuz crisis, the shankar class cotton prices in india have shown “temperature”, with only a small 2. 8 per cent increase, the price of glued short fibres has remained stable, and the fob price of the knitting line has remained almost flat, and the cotton surface remains a “risk avoidance option” for large commodities compared with the sharp increase in the cleaning of short fibres. But this seemingly comforting figure is quite different from the actual operation of the indian cotton mill. – behind the stability of the former cotton prices is the mad rise in production costs and the crisis of the survival of the entire industry。
The multiple storm surges and the “destructive rise” of indian cotton spindle costs. The most intuitive impacts came from the energy sector, affected by the american-israeli war, continued obstruction of shipping in the straits of hormuz, a sharp rise in international gas prices, and the rise in indian industrial gas prices ranging from 107 to 200 per cent, with adani global gas ltd. Increasing the price of gas for industrial users even from rs. 40 to rs. 120 per standard cubic metre, which directly doubled the cost of fuel for cotton processing. At the same time, the price of dyes and chemical raw materials rose simultaneously by 20 to 30 per cent as a result of disruptions in the supply of oil and sulphur, further exacerbating the pressure on processing costs。
The adjustment of tariff policies has been exacerbated. With effect from 1 january 2026, india formally ended its temporary duty-free policy on cotton imports and fully restored its 11 per cent combined import tariff, directly increasing the cost of overseas cotton purchases in textile factories, which increased by 5-7 per cent over the same period. This is compounded by the sharp increase in shipping costs in the strait of hormuz, an additional 12 to 55 rupees in freight charges for individual clothing, and the dilemma of the indian cotton industry, which had relied on imports to fill supply gaps。
The continued transmission of cost pressures has led directly to the “cut-off” of the cotton mill industry in india. As the garment manufacturing centre in southern india, tirupul, where clothing production has been cut by 50 per cent, more than 600,000 textile workers face unemployment, shorter working hours and lower wages, and many factories are shut down even directly. In surat, another textile heavy town, affected by energy ration constraints and high costs, local textile factories were forced to shut down their production for two days a week, and related industries, such as former drilling cutting and polishing, were reduced in capacity by the sharp fall in orders, resulting in a loss of up to rs. 600 million per day。
Even worse, there are serious gaps in the supply side of indian cotton. According to icra, a rating agency, during the cotton year 2025-2026 (october 2025 to september 2026), cotton production in india is expected to contract by 1. 7 to 29. 2 million packs, the lowest level in a decade, mainly due to reduced cultivation, water scarcity and monsoon rainfall. In order to fill the domestic supply gap, india had to increase its cotton imports, which were expected to reach a record 4. 5 million in 2025-2026, largely dependent on supplies from the united states, brazil and other countries, but the obstruction of shipping in the straits of hormuz led to delays in import orders, further tightening domestic supply, and the price of 1 candi (356 kg) cotton soared from rs. 1000 to rs. 1,500 in the last week。
Multiple dilemmas have been added and the indian cotton “risk avoidance asset” label has quickly lapsed. Icra predicts a 4 to 6 per cent decline in income and a 50 to 100 basis points of profit in india's major cotton-sprinkled enterprises in fiscal year 2026, while a decline in cotton production will also affect rural employment, leading to a reduction in temporary and seasonal jobs, further exacerbating rural economic pressures. At the same time, united states tariff restrictions on indian clothing exports have further inhibited downstream demand and exacerbated the already difficult indian cotton industry。
Industry warns that if the holmuz crisis persists, energy prices remain high and tariff policies are not adjusted in a timely manner, the plight of the indian cotton mill will continue to worsen and may even lead to the closure of more small and medium-sized textile factories, further undermining their competitiveness in the global cotton industry. Currently, the indian textiles association is pushing for a phased resumption of the government's cotton import duty-free policy to ease industry cost pressures, but the impact of the policy landing remains to be seen。
