India’s cotton imports last time touched a record high was in 2001-02 when they were 25 lakh bales. But this season it’s cotton imports have touched an all-time high of 30 lakh bales. According to Pradeep Jain, a cotton ginner from Jalgaon, cotton imports have touched some 30 lakh bales this season because of attractive international prices while exports have been in the range of 20 lakh bales.

Buoyed by the good prices this season, farmers are expected to plant 20% more cotton in the 2017-18 season.

MM Chokalingam, chairman and MD in charge, Cotton Corporation of India ( CCI) said that the market and international rates of cotton have almost been on par and most cotton mills, especially in south India, have found it feasible to import.

Cotton exports which were brisk at the start of the season touching 30 lakh bales, has become subdued with international rates coming on par with India, he added. Usually, there is a difference of 7 cents between domestic and international rates but with rates on par, the realisations from international cotton are higher, Chokalingam points out.

From high moisture level to contamination and adulteration, Indian cotton faces a number of quality issues, forcing textile companies to depend on imports. Moreover, continued dollar inflow into the Indian market is seen to keep the rupee strong, which would encourage imports.

Cotton rates in the domestic market are currently in the Rs 5,200-5,300 per quintal range. In the middle of the season, rates had breached the Rs 5,800-6,000 per quintal mark.

According to Chokalingam, since January this year, imports have been more lucrative for cotton millers as the trash content in Australian and African cotton is barely 1% as compared to 3 % in Indian cotton because of which the realisations are higher.

Moreover, international purchasing became more lucrative because of the strength of the Indian rupee as compared to the American dollar, he said.

Imports from African countries work out cheaper for mills in south India, as opposed to purchases from traders in Gujarat, Rajasthan and Maharashtra at a premium, and the added transportation cost.

According to industry experts, some of the farmers held onto their stocks in the middle of the season causing a dip in supply and mills, therefore, turned towards imports. Around 80% of cotton arrivals had come in by the end of April and the season has almost come to an end.

Significantly, international cotton prices were in the range of 65-70 cents per pound in September-October last year, which is usually a lean season for India. Prices went up later due to demonetisation that caused a cash crunch.

The situation saw a reversal in March, as cotton prices in the US hit an 18-month high of 79.8 cents a pound due to strong exports and on anticipation of a fall in global inventories in 2017-18. Arrivals currently are in the tune of 50,000 bales on a daily basis and around 310 lakh bales have already arrived in the market as against the total production estimates of 341 lakh bales.