Cotton Industry History

Indian Cotton Industry's history of establishment through the years has a rich past. With 19th century India had successfully established major production industries and cotton was an essential staple fabric, which was needed in almost every work of life in India.

Indian Cotton Industry was the precise industry, which fostered a humble beginning, attracting budding Indian industrialists. In 1854 towards making that dream into a reality, James Landon established the Broach Cotton Mill, the first successful cotton mill in Bombay. The first steam- driven cotton mill also went into production in 1856. 79 cotton mills were in operation by 1883, as Bombay took the industrial lead. Establishment of cotton industry was thus an initiation of a new history. Government of India in October 1861 issued a waste lands order for the purpose of encouraging the growth of cotton.

Brief Introduction

Cotton is one of the principal crops of India and is the major raw material for domestic textile industry. The Indian Cotton Industry provides sustenance to millions of farmers as also the workers involved right from processing to trading of cotton. The Indian textile industry consumes a diverse range of fibres and yarn, but is predominantly cotton based. The ratio of cotton to manmade fibres and filament yarns by the domestic industry is about 56:46.

Indian Cotton Industry has an overwhelming presence in the economic life of the country. Apart from providing one of the basic necessities of life, the Cotton industry also plays a pivotal role through its contribution to industrial output, employment generation and the export earnings of the country. It contributes about 14% to the industrial production, 4% to the GDP and 14.42% to the country's export earnings. India is the only country growing all four species of cultivated cotton starting from Gossypium arboreum and herbaceum (Asian cotton), G.barbadense (Egyptian cotton) and G.hirsutum (American Upland cotton). Gossypium hirsutum represents 90% of the hybrid Indian cotton production and all the current BT cotton hybrids are G.hirsutuim. India produces large number of cotton varieties and hybrids. Though the number of varieties in cultivation exceeds 75, 98% of the production is contributed by about 25 varieties only.

Indian Cotton is produced in three zones across the nation viz., Northern zone comprising the States of Punjab, Haryana and Rajasthan & Central zone comprising the States of Maharashtra, Madhya Pradesh and Gujarat and Southern zone comprising the States of Andhra Pradesh, Karnataka and Tamil Nadu. Cotton cultivation has gained momentum in the eastern State of Odisha, besides these there are nine States also. The production of cotton has gone up from 7.5 million bales in 1983-84 to 16.3 million bales of 170 kg/bale during 1998-99. In the year 2008-09 during cotton season the country once again harvested higher cotton production for the fifth consecutive year at 4.93 million metric tons (equivalent to 29.0 million bales of 170 kgs each).

Market Capitalization

Government decision to permit the export of 85 lakh bales as against the earmarked quantity of 55 lakh bales by Cotton Advisory Board at the beginning of cotton season (Oct-Sept) has brought down the closing stock to around 38.5 lakh bales, making to stock to use ratio at 15%. Whenever the stock to use ratio was dipped below 20 %, the cotton prices have increased abnormally the recent notification notification had resulted in jacking up the prices of cotton almost rs.4000 per candy of 355 kg within a month.

Size of the Indian Cotton Industry

As a part of measures to boost cotton trade, the Government of India had liberalized raw cotton exports since July 2001, dispensing with the system of allocation of cotton export quota in favour of different agencies and traders. Exports of cotton from the country are under Open General Licence (OGL) since July 2001. During the year 2008-09, the cotton exports from the country reached at US$ 850 million including 35 lakh bales. Today Cotton crop contributes about 14 - 16% to the total agricultural-crop in India. India has the largest area under cotton with 9 million hectares in the world constituting 26% of total world cotton area. India presently produces 4.59 million tonnes of cotton with 27 million bales of 170 kgs each which constitutes 18% of the world cotton production.

INDIAN cotton industry at a glance in 2011 - 2012

India’s cotton output is likely to dip by two million bales to 32.3 million in the 2012-13 marketing year as farmers are likely to switch over to better-priced alternative crops amid unclear cotton export policy, according to a report.

India, the world’s second biggest cotton grower, had produced record 34.25 million bales in the 2011-12 marketing year. One bale contains 170 kg of cotton. Cotton production is forecast to decrease by two million bales to 32.3 million bales as the area is expected to drop by 10 per cent. But domestic consumption is expected to increase to 26 million bales from 25.3 million bales. However, India’s exportable cotton supply would be only six million bales in 2012-13 against 11.75 million bales this year, given an expected drop in production and higher domestic demand. Several factors suggest that cotton area in 2012-13 will be lower at 10.9 million hectare against the record 12.2 million hectares in 2011-12.