The recent spurt in cotton prices has resulted in higher input costs for the spinning sector in India.  So the Cotton Corporation of India will sell its existing stock purchased under the minimum support price to spinning mills in the micro, small and medium enterprise category.

The industry is expecting a heavy squeeze on margins as the demand-supply imbalance is stoking cotton imports and new crop arrival is delayed due to late sowing of cotton.
 
Most spinners are likely to run short of raw material before the new crop arrives.

The cotton demand-supply imbalance is likely to last till November due to the late sowing owing to the delayed rains this year.

Prices are up 30 per cent in spot markets and likely to further increase due to the demand and supply imbalance.

The spinning industry is in dire need of fiscal incentives.

The demand- supply imbalance has fuelled cotton contracts for imports from Australia, Brazil, Pakistan, West Africa and the US. But most firms are not in a position to enter import contracts as shipments will be delayed and prices are on the rise.

Yarn manufacturers are likely to be the worst affected as moderate demand has left little scope for a rise in prices of products.