Despite a drop in cotton supplies due to bad monsoon, the industry will be left with a cotton surplus. A mild drought could result in a crop of 40.2 million bales this year against last year's 40.7 million bales. Even Gujarat, which is a major producer of cotton in India, is expected to see a drop in overall output. But even with falling output levels, India is set to experience a cotton glut this year.
The glut is being accredited to China's decision of reducing its global cotton imports. India being a major supplier of cotton to China will face most of the heat. China's decision to lower cotton imports will hugely affect India's cotton exports. The United States Department of Agriculture (USDA) expects a 47% fall in Indian cotton exports this year. Insufficient exports will lead to an increased supply of cotton in the domestic market thereby pushing prices below the profitable mark.
Cotton farmers in India rely on loans to meet production costs and the fall in their profits could further intensify the suicide stricken cotton belts of India like the Vidarbha region in Maharashtra. The state of Maharashtra alone recorded 204 deaths directly related to agrarian causes like monetary losses from crop failures. The Indian government will have to be on its toes as farmer suicide numbers in most parts of the country may inflate now.