Industrial Cluster: The Reduction Of Indian Cotton Production Affects India'S Export Competitiveness

Indian cotton seeds are sown in summer from February to March.

The decline in India's planting this year is expected to lead to a reduction in cotton production. It is hoped that the sown area will slightly increase from the current 11.2 million hectares to 1.6 million hectares. It is estimated that the summer sowing in Tamil Nadu will increase by 200000 hectares, and the other 100000 hectares will come from the west of Trengana and Karnataka. "

The decline in output will affect textile exports, which is expected to be lower than the level of the previous fiscal year.

India's textile exports are declining. The export volume declined from US $33.83 billion in fiscal year 2020 to US $29.46 billion in fiscal year 2021. Although the export increased to USD 41.12 billion in 2022, it declined to USD 35.55 billion in 2023 and further decreased to USD 34.4 billion in 2024.

The government has determined that the textile export target will exceed 40 billion US dollars by 2025.

Abhash Kumar, an assistant professor of economics at the University of New Delhi, said: "Given that the decline in sown area is expected to lead to a reduction in output, it will be challenging to achieve the estimated export target of more than 40 billion dollars in fiscal year 2025. The current trend of declining sown area and output also aggravates people's concern about achieving these ambitious goals in the future."

India's cotton output has also declined in recent years, reaching a peak of 36 million bales (170 kg per bale) in fiscal year 2020.

The output will decline to 35 million bales in 2021, and then further decline to 31 million bales in 2022. Although the output slightly rebounded to 33 million bales in FY2013, it again declined to 32 million bales in FY2024.

In recent years, cotton planting has faced more and more serious challenges: outdated seed technology has seriously affected the yield per unit area, prompting many farmers to turn to alternative crops such as soybeans and rice.

Ganesh Nanote, a cotton farmer in Vidarbha, Maharashtra, said: "The shortage of labor force and the increase of planting time, as well as outdated technology, have also led to a decline in the productivity of cotton planting. Compared with soybean planting, cotton planting requires more intervention and resources, and is inefficient."

The largest cotton growing states are Gujarat, Maharashtra, Trengana, Andhra Pradesh, Madhya Pradesh, Karnataka, Haryana and Rajasthan.

According to the data of the Indian Brand Equity Foundation (IBEF) of the Ministry of Commerce, the Indian textile and clothing market is expected to grow at a compound annual growth rate of 10%, reaching 350 billion dollars by 2030. India has also set the goal of expanding its textile exports to US $100 billion by 2030, aiming to occupy an important share of the global market.

Mihir Parekh, associate partner of clothing of the Economic Development Foundation (FED), said: "About 55-60% of India's textile and clothing exports are made of natural fibers, mainly cotton. Therefore, the decline in cotton planting area and the resulting rise in cotton fiber prices pose a major risk to India's textile and clothing exports. The fact that 10% tariffs are required to import cotton fibers increases this risk. By increasing the price of raw materials in the whole value chain, India's export competitiveness can be greatly affected. "

In addition, India is the world's third largest exporter of textiles and clothing, and ranks among the world's five largest exporters in some textile categories.

The textile and clothing industry contributes 2.3% to the country's GDP, 13% to industrial production and 12% to exports. According to the report of IBEF, the contribution of India's textile industry to GDP is expected to double from 2.3% to about 5% by the end of this decade.

In the 2024/25 federal budget, the budget allocation for the textile sector increased by 974 million rupees to 4417.09 million rupees.