US Cotton Exports to India Surge Amid Lower Prices and Shifting Tariffs

The export of Upland cotton from the United States to India has seen a significant increase in recent months, driven by lower American cotton prices, global trade tensions, and a growing demand from the South Asian nation, according to industry analysts.

Data from the United States Department of Agriculture (USDA) reveals that cotton exports to India rose sharply from 25,901 bales in the same period last year to 155,260 bales between February and April this year. The weekly export volume peaked in the week of February 20, reaching the highest level in over two and a half years.

This surge comes at a time when trade tensions between Washington and Beijing are escalating. China has announced an increase in tariffs on US goods, with cotton facing a steep hike from 84% to 125%. As a result, US-grown Upland cotton, especially from regions like Texas, is now being redirected to India, says Ajay Kedia, Director at Kedia Advisors.

Meanwhile, exports to China are expected to decline further, said Justin Cardwell, Head of Research and Technology at Alternative Option. With Chinese demand weakening and tariffs increasing, the Indian market is emerging as a valuable alternative for American cotton producers.

India, the world’s second-largest cotton producer after China, is also a major processor and exporter of cotton yarn. However, declining domestic yields have transformed India from a net exporter to a net importer of cotton in recent times.

Currently, India predominantly imports extra-long staple (ELS) cotton from the United States, which enjoys a 10% duty exemption. In contrast, short staple cotton is subject to an 11% import duty. According to Kedia, the superior fibre quality, higher yield, and better lint recovery make American ELS cotton an economically attractive option for Indian buyers despite the added costs.

The Cotton Association of India (CAI) has revised its cotton production forecast for the current season, lowering the estimate by 250,000 bales to 30.1 million bales. This marks a 7.84% decrease compared to the 2023–2024 season.

At the same time, ICE cotton futures have declined by nearly 5% since the beginning of the year, further adding to the appeal of imported cotton for Indian buyers.

Y. G. Prasad, Director of the Central Institute for Cotton Research, warned that India could face a cotton shortfall of up to 2.5 million bales this year. This gap, he noted, would likely be bridged through increased imports.

In light of the production downturn, CAI forecasts that India’s cotton imports will double in the 2024/25 season. In addition to the United States, India also sources cotton from Australia, Brazil, and Egypt to meet its growing domestic demand.

This shift in global cotton trade patterns underlines how geopolitical developments and supply-side challenges are reshaping traditional export routes and opening new opportunities for exporters, particularly in regions where demand remains robust.