The Indian government is taking direct action in an effort to stabilise cotton prices, which have plunged to new lows in the country.

Minister for Commerce, Industry and Textiles Shri Anand Sharma announced a revision of minimum support price (MSP) levels, raising MSP prices for medium staple cotton from INR2,800 per quintal to INR3,600/qtl; and for long stable cotton from INR3,300/qtl to INR3,900/qtl for cotton season 2012/13.

Meanwhile, India’s Cotton Advisory Board has estimated this year’s cotton production in India at 33.4m bales, with consumption likely to hit 26m bales and an exportable surplus of 7m bales.

“Although domestic consumption is showing increasing trends, the sharp decline in global trade and increase in world stocks have imposed a downward stress on cotton prices, which is reflected in Indian cotton markets also,” the Ministry said.

Domestic prices had touched MSP levels in parts of Andhra Pradesh, and were close to MSP levels in Maharashtra, Punjab, Rajasthan and Madhya Pradesh, it added.

This had led the government to formulate a contingency plan to procure 9m bales of cotton under MSP operations in nine cotton-growing states.

Meanwhile, reports in India suggest that the Textiles Ministry is about to impose a 10% duty on shipments of cotton beyond the declared exportable surplus of 7m bales.

The move is described as a further measure designed to bring about price stability.