Cotton production in India has received a boost from a good monsoon this year. The country is expected to produce 35.8 million bales in 2013-14, up 5.7 per cent from 2012-13 levels. Domestic consumption of cotton, however, is likely to rise only by 3.6 per cent to 29.8 million bales. This leaves a 6 million bale surplus available for exports. 

The weakening rupee against the dollar provides a strong impetus for exports of cotton by India. However, the agriculture ministry is in favor of diverting the bulk of domestic stocks of cotton for the benefit of textile units in the country. These units are constantly lamenting shortfalls in availability of input material and high prices.

If Open General Licenses (OGL) are not issued, most exporters’ hopes are likely to be squashed.  And indeed overseas shipments of cotton plummeted in the first half of 2013 in the absence of sufficient export licenses. 

On the other hand, global demand for cotton has risen. This is likely to result in tightness in the international supply situation, presenting an enormous opportunity for Indian cotton growers to reap a good price for their produce, if the government permits it. 

In contrast to the Indian situation, global production of cotton is said to have declined during the year amid unfavorable weather in key producing countries such as China.