CCI’s Cotton Procurement

Context

The Cotton Corporation of India (CCI) has procured nearly 100 lakh bales of cotton at Minimum Support Price (MSP) in the 2024–25 cotton season, with disbursements amounting to approximately ?37,500 crore. Concurrently, cotton imports surged by over 130%, raising concerns about domestic pricing and the competitiveness of Indian cotton in international markets.

About Cotton Corporation of India (CCI):

Establishment: 1970, under the Ministry of Textiles.
Headquarters: Navi Mumbai.
Mandate: To protect the interests of cotton farmers by purchasing kapas (raw cotton) at MSP; ensure price stability and supply management.
Functions:
- MSP operations as per Government of India directives.
- Commercial operations in open market when prices are above MSP.
- Balancing demand-supply and quality assurance in the cotton trade.

Current Developments in Cotton Sector:

Cotton Procurement (2024-25 Season):
- CCI procured 100 lakh bales at MSP.
- Sold 35 lakh bales to textile mills and traders.
- Operated 500+ procurement centres since October 2024.
- Expenditure on MSP procurement: ?37,500 crore.
- MSP for next season (2025-26) hiked by 8%, implying potentially higher procurement costs.
Import Trends:
- 133% increase in import quantity in May 2025 vs May 2024.
- 131% increase in import value in April–May 2025 vs same period in 2024.
- Reasons:
  - International cotton is ~8% cheaper than Indian cotton.
  - 11% import duty still leaves foreign cotton 1–2% cheaper.
- Impact: Reduced competitiveness of Indian textile mills in global markets.