Higher MSP may put India’s cotton trade under pressure

The government increased the MSP for medium staple cotton to ****;*,*** (~$**) per quintal and long staple cotton to ****;*,*** (~$**) per quintal for the ****–** season, up from ****;*,*** (~$**) and ****;*,*** (~$**), respectively, in ****–**. The revision represents a *.** per cent increase for medium staple cotton and a *.** per cent rise for long staple cotton over the previous season.

Over the past six years, the MSP has risen by **.** per cent for medium staple cotton and **.** per cent for long staple cotton, reflecting the government**;s continued efforts to ensure remunerative prices for growers.

However, traders and industry participants cautioned that the higher MSP could widen the gap between market prices and government support prices, making it uneconomical for private buyers to procure cotton during the new marketing season.

“When the MSP remains above prevailing market prices, farmers naturally prefer to sell to the Cotton Corporation of India (CCI), which guarantees the support price,” a cotton trader said. “Private traders, ginners and multinational merchants cannot match those prices without incurring losses, resulting in very limited procurement by the trade.”