The country’s cotton purchase is expected to dip 89 per cent in the 2015-16 marketing year. Local prices have jumped after crop failures forced Pakistan to raise imports from India. India is the world's biggest producer of cotton fiber.

The increase in shipments to Pakistan, Bangladesh and Vietnam will help India trim spending on cotton imports. India has so far contracted 3.6 million bales for exports, including nearly two million bales to Pakistan. Prices have moved above the minimum support price level in most states and farmers are selling to private players.

A drop in India’s production due to a pest attack and the first back-to-back drought in nearly three decades have also been supporting prices. In a scheme to assist India’s cotton farmers, the Cotton Corporation of India buys raw cotton fiber from them at Rs 4,100 per 100 kg.

Up to September 30, India bought 8.7 million bales at the MSP as top consumer China started slashing imports. In the current marketing year, the government purchases were again expected to rise to last year's level due to poor demand from China. But a sudden increase in demand from Pakistan and a decision by India’s top producing state Gujarat to buy from farmers at levels higher than the MSP boosted prices and reduced the need for state support.