Faced with a record cotton harvest but falling global prices, the Indian Government has asked a state-run agency to step up its support for local cotton producers by buying more raw cotton.

A meeting called by Agriculture Minister Radha Mohan Singh, and attended by the Ministers of Commerce, Textiles and Labour, requested the Cotton Corporation of India (CCI) to open an "adequate number" of new centres in all cotton growing states to ensure that the cotton produced by the farmers is purchased at the minimum support price (MSP).

Some local reports suggest this would see the number of CCI procurement centres in southern states increase from 90 to more than 130.

According to the latest data, Indian prices for Shankar-6 cotton slipped last month, falling from 71 cents/lb to 68 cents/lb or from INR33,800 per candy to INR 32,900 per candy. A candy is 355.54g. The CCI has so far bought 250,000 170kg bales in the current season, mostly from the southern states.

However, there are also concerns that significant purchasing and storage of cotton under the MSP would lead domestic prices to rise above the world level, resulting in higher stocks.

Estimates suggest India will this year overtake China as the world's largest producer of cotton, with the cotton-growing area increasing by 5% as farmers have been encouraged to switch to cotton because of a delayed monsoon. The country is expected to produce 31m 480lb bales in the 2014/15 season, compared with China's 30m bales.

India is also the world's second-largest exporter of cotton, with exports of around 5m bales seen for 2014/15. Yesterday's government meeting confirmed there were no restrictions on cotton exports.