India’s Cotton Industry to Hit $30 Billion by 2027: Know its Impact

Every year, on October 7, World Cotton Day is celebrated, highlighting the global significance of the cotton industry. In India’s textile industry, cotton plays a vital role — not only is it an essential part of Indian agriculture, but it also contributes significantly to the country’s economy and textile sector.

India also exports cotton to various countries. In this article, we will discuss the role of the cotton industry in India’s textile sector, its economic contribution, and investment opportunities.

Current State of India’s Cotton Industry

India is the world’s largest cotton producer, contributing 23% to global cotton production. This crop is extremely important for the Indian economy as well as for the livelihoods of cotton farmers. Cotton is cultivated across approximately 13.06 million hectares in India out of a global total of 33.1 million hectares. Additionally, the cotton industry provides employment to nearly 60 million people, making it a crucial part of India’s rural economy.

As of November 2023, India produced 31.6 million bales of cotton in the 2023-24 period, compared to 34.3 million bales in 2022-23 and 31.1 million bales in 2021-22.

Top Cotton-Producing Regions in India

In the Central Zone, states like Gujarat, Maharashtra, and Madhya Pradesh lead cotton production. Gujarat, in particular, produced 9.49 million bales in 2022-23, the largest contribution from the Central Zone. Within Gujarat, the Saurashtra region accounts for nearly 70% of the state’s cotton production, with Amreli district being the top producer. In Maharashtra, the Vidarbha region — covering districts like Yavatmal, Buldhana, Akola, Amravati, Nagpur, Washim, and Wardha — is a key cotton-producing area.

The Southern Zone includes states like Telangana, Andhra Pradesh, Karnataka, and Tamil Nadu, contributing 28.5% of the country’s total cotton output. Telangana is the largest producer in this region and the third-largest in the country, producing 5.31 million bales.

Cotton is the second-largest employer in India after agriculture, supporting the livelihoods of nearly 6.5 million cotton farmers.

Role of Cotton in the Textile Industry

Cotton plays a crucial role in India’s textile industry as a primary raw material, accounting for 60% of the industry’s inputs. Although India’s textile industry uses various fibres and yarns, cotton’s share is higher than non-cotton fibres, unlike the global scenario. In India, the cotton-to-non-cotton fibre ratio in the textile industry is 60:40, while globally, it is 30:70.

Cotton not only meets the needs of the textile industry but also plays an important role in export markets. Due to its economic importance, cotton is often referred to as ‘White Gold.’

India’s Cotton Exports

In FY24, as of January 2024, India’s major cotton importers were Bangladesh, China, Sri Lanka, and Vietnam, which together accounted for 45% of India’s total cotton exports. Bangladesh was the largest importer, receiving 34% of India’s cotton exports, while China ranked second with a 13% share. Despite the challenges posed by the COVID-19 pandemic, India continued exporting cotton and cotton yarn.

In FY 2020-21, India exported 275 million kilograms of cotton yarn to China, making it the largest importer, followed by Bangladesh, which imported 225 million kilograms. Vietnam and Peru were also key export destinations for Indian cotton yarn, importing 56 million kilograms and 53 million kilograms, respectively.

Leading Companies in the Textile Industry

While other sectors like railways and defence have provided excellent returns to investors in recent years, the performance of stocks in the textile industry has been relatively modest. However, the future performance of the textile industry will depend on various factors. Investors interested in this sector may consider the following stocks for their watchlist:

Future of the Cotton Industry

The future of India’s cotton industry looks promising. Innovations, technological advancements, and government initiatives have kept the textile industry competitive on a global scale. Additionally, schemes like 100% FDI and the Production Linked Incentive (PLI) are creating new investment opportunities in the textile sector.

According to IBEF, India’s cotton production is expected to reach 7.2 million tons by 2030 due to growing consumer demand. Furthermore, the Indian cotton industry is projected to surpass US$ 30 billion by 2027, capturing a 4.6-4.9% share of the global market.

India’s textile industry is expected to grow at a compound annual growth rate (CAGR) of 10%, reaching US$ 350 billion by 2030, with exports likely to hit US$ 100 billion.

That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!

The companies mentioned in the article are for information purposes only. This is not investment advice. Disclaimer: Teji Mandi Disclaimer