India: A Cotton Giant

ccording to India’s Ministry of Textiles, India was the first country in the world to
domesticate cotton for the production of cotton fabrics, when members of the Indus Valley
Civilization began to grow the fiber in 1750 BC for manufacturing textiles.

TEXPROCIL, India’s Cotton Textiles Export Promotion Council, states the earliest written
reference to cotton is in India, in the Rig-Veda, recorded in 1500 BC.

Agricultural Significance

Cotton is one of India’s chief crops, employing approximately 6 million farmers, and
indirectly employing an additional 40 million to 50 million people in activities related to its
cultivation, processing and trade. Because the textile sector provides the second-highest number of
jobs after agriculture, growth and development of cotton cultivation and the cotton industry will
impact markedly India’s overall economic development.

According to the Ministry of Textiles’ 2009-2010 Annual Report, out of all cotton-producing
countries, India ranks first in cotton-cultivated area, accounting for 9 million hectares of land
and 25 percent of total cotton-cultivated land in the world. The Ministry points out that India is
behind other countries with regard to productivity, accounting for only 20 percent of world cotton
production, in large part because 65 percent of cotton-cultivated lands depend on rainfall and 35
percent are irrigated.

India has the distinction of being the only country to grow all four cultivated cotton
Gossypium arboreum and
herbaceum (Asian cotton);
G. barbadense (Egyption cotton); and
G. hirsutum (American Upland cotton). Although the country produces more than 75 cotton
varieties and hybrids, 25 varieties make up 98 percent of cotton production. There are three
principal cotton production zones: the Northern zone, including Punjab, Haryana and Rajasthan; the
Central zone, including Maharashtra, Madhaya Pradesh and Gujarat; and the Southern zone, including
Andhra Pradesh, Karnataka and Tamil Nadu. Cotton also is produced in the eastern state of Orissa.

Over the years, India’s cotton industry has developed improved varieties and hybrids in
different staple length groups and implemented improved production and plant protection
technologies. Cotton farmers have increased the acreage being planted with genetically modified Bt
varieties, which not only has led to increased net earnings and decreased pesticide usage, but also
has improved cotton yields. The area under Bt cultivation during the 2008-09 cotton season, which
runs from October to September, increased by 6 percent, to around 73 percent of India’s total
cultivated land acreage, putting the country in first place globally with regard to Bt cotton


India ranks second in cotton production behind China. The Cotton Corp. of India Ltd., a
governmental marketing agency for cotton, reports the country’s output for the 2009-10 cotton
season is estimated at a record 29.2 million bales of 170 kilograms (kg) each, with cotton
cultivated area totaling 10.2 million hectares and yielding 488 kg of cotton per hectare. The
Ministry of Textiles has projected that by 2012, the final year of the 11th Five Year Plan, cotton
production will total 39 million bales and the yield per hectare will increase to 700 kg.

According to the Confederation of Indian Textile Industry (CITI), in 2008-09, India produced
2.9 billion kg of spun cotton yarn, 0.7 billion kg of cotton-blend yarn, 26.9 billion square meters
(m2) of cotton fabric and 6.8 billion m2 of cotton-blend fabrics. In that year, India’s exports of
raw cotton including waste were valued at 2,865.9 crore rupees, or US$623.1 million; and its
exports of cotton yarn, fabric and made-up items were valued at 18942.3 crore rupees, or US$4118.5

The India Cotton and Products Annual 2010, a report published by the U.S. Department of
Agriculture, references data from the Ministry of Textiles indicating the top destination for
India’s cotton exports from October 2009 to March 2010 was China, which imported 2.3 million
480-pound bales. Bangladesh imported 631,000 bales; followed by Pakistan, 284,000 bales; Hong Kong,
167,000 bales; Indonesia, 142,000 bales; Vietnam, 136,000 bales; and Turkey, 121,000 bales. Other
top destinations for India’s cotton exports include Taiwan, Thailand and Malaysia.

India’s textile industry consumes a wide variety of fibers and yarn, but cotton is the
primary raw material used by the industry, which, according to the Ministry of Textiles, comprises
1,608 spinning mills and 200 composite mills, with an installed capacity of 35.61 million spindles,
448,000 open-end rotors and 69,000 looms in the organized sector; plus 1,219 small-scale spinning
units with 4 million spindles and some 157,000 rotors in the small-scale decentralized sector.
Domestically, the usage ratio of cotton to man-made fibers and filament yarns is approximately
56:46. The decentralized hosiery sector leads in cotton cloth production, with 6,556 million m2 in
2009-10; followed by the decentralized powerlooms sector, with 6,252 million m2; the handlooms
sector, with 3,448 million m2; and the mill sector, with 726 million m2.

Organic Cotton

Organic Exchange’s (OE’s) fourth annual Organic Cotton Farm and Fiber Report 2009 revealed
that despite the global recession, the organic cotton market experienced strong growth in 2009, far
outpacing growth in the conventional cotton market. Global organic cotton production in 2008-09
increased 20 percent over 2007-08, from 145,872 metric tons to 175,113 metric tons cultivated on
253,000 hectares. OE predicts the worldwide organic cotton market will increase by 20 to 40 percent
in both 2010 and 2011 to total an estimated US$5.1 billion and US$6 billion, respectively.

Of the 22 countries worldwide that grow organic cotton, India is the leading producer, with
production in 2008-09 measuring 107,510 metric tons, representing approximately 61 percent of
global organic cotton production. Most of India’s organic cotton is produced in Gujarat, Madhya
Pradhesh, Maharashtra, Orissa and Andhra Pradesh. The Cotton Association of India reports that out
of 3.5 million bales of cotton exported from India in 2008-09, more than 100,000 were organic
cotton. The Organic Cotton Advisory Board, headed by the textile commissioner, was formed on Oct.
14, 2008, to oversee India’s organic cotton industry.

Government Assistance

India’s government has put into effect numerous policies to help grow its cotton industry.
The Cotton Corp. of India has established developmental programs such as the Contract Farming
project in all cotton-producing states, to provide technology that has enabled farmers to increase
the yield per hectare and improve quality; and to distribute genetically pure certified seeds and
pesticides. Literature detailing best management practices is also made available. In the 2008-09
season, 46,837 hectares of land were cultivated under the Contract Farming project, which increased
yield per hectare by some 74 percent, from 302 kg in 2002-03 to 526 kg in 2008-09.

The Technology Upgradation Fund Scheme — the leading program of the Ministry of Textiles —
originally was created in 1999 to provide credit at reduced rates to enable entrepreneurs to
upgrade technologies of existing textile operations and bring online new operations with innovative
technology to strengthen their competitive positions both in India and globally. The government has
extended the scheme until 2012.

Export Restrictions

According to the Ministry of Textiles, cotton yarn prices, which had been experiencing a
consistent increase in the previous year, in November 2009 began rising significantly in India
because the surge of exports was reducing the domestic availability of cotton yarn. Though the
Indian government earlier had imposed a 3-percent tax on cotton exports, it suspended registration
of export contracts prior to the shipment of raw cotton, cotton waste and carded/combed cotton from
April 19, 2010, in an effort to control rising prices and bolster supplies in the domestic market.
Then in May, the Directorate General of Foreign Trade moved cotton exports from “free” to the
“restricted” list, permitting shipments only under license. The Cotton Association of India reports
the Commerce Secretary of the Government of India was quoted to have stated that raw cotton exports
will be on Open General License without any restrictions as of October 1, indicating the ban will
be lifted
(See ”
Rupp Report: Cotton Supply Challenges
,”, August 3, 2010)

July/August/September 2010