Research Article
Agri Res Tech Open Access J
Volume 1 Issue 1 - 2015
Copyright © All rights are reserved by Josily Samuel
Production, Growth and Export
Competitiveness of Raw Cotton in India
– an Economic Analysis
Josily Samuel1*, Basavaraja H2, Pushpanjali1 and R Rejani1
1
Central Research Institute for Dryland Agriculture (CRIDA), India
2
University of Agricultural Sciences (UAS), India
Submission: September 15, 2015; Published: September 23, 2015
*Corresponding author: Josily Samuel, Scientist, Central Research Institute for Dryland Agriculture (CRIDA), Santhosnagar, Hyderabad, India,
Tel: 044 - 2453 2243; Email:
Abstract
Cotton is one of the major commercial crops where 70% of the crop is under rain fed conditions. Eighty-five % of the cotton is grown in ten
major countries of the world among which India stands second in production. The present study analyses the state wise production scenario
of cotton over the years as well as the export composition and competitiveness. The study revealed that the % change of cotton area in the
period II over the period II was highest for the state Andhra Pradesh (71.96%). Moreover, the country as a whole had an increase of 17.73%
with a production increase of about 84.78 % and productivity increase of about 55.64%. The growth rate of the cotton area was negative while
the growth of cotton production in the country was 4.47% and 3.91% increase in productivity during the period II. The study also showed
that India has been exporting all types of cotton from 1980 onwards and the long and extra long staple cotton has registered highest share of
exports with more than 40%. The export competitiveness revealed that India’s comparative advantage in cotton exports has been increasing
over the years.
Keywords: Cotton; Export; Production; Competitiveness
Abbreviations: CMIE: Centre for Monitoring Indian Economy Pvt. Ltd.; ACGR: Annual Compound Growth Rate; RCA: Revealed Comparative
Advantage; EPR: Export Performance Ratio; TE: Triennium Ending; RSCA: Revealed Symmetric Comparative Advantage.
Introduction
Cotton is one of the most important textile fibres in the
world, accounting for 35% of the world fibre use. Cotton was
first cultivated in the Old World about 7,000 years ago, by the
inhabitants of the Indus Valley Civilization. This civilization
covered a huge swath of the north-western part of the Indian
subcontinent, comprising today parts of eastern Pakistan and
north-western India [1,2]. About 60 countries from around the
globe produce cotton. The ten major cotton producers are USA,
India, China, former USSR, Brazil, Pakistan, Turkey, Mexico, Egypt
and Sudan accounting for 85 % of the total production. The United
States, India and China together provide two- thirds of the world’s
cotton. It is an important cash crop to many developing countries
supporting the livelihoods of millions of poor households. Among
the countries in which cotton is an important contributor to rural
livelihoods are China, India and Pakistan where millions of rural
households are engaged in cotton production and more than
two- thirds of the world’s cotton is produced in the developing
countries [3] (http://cotcorp.gov.in). The area under cotton
across the world has been stagnant for the last five decades;
Agri Res Tech Open Access J 1(1): ARTOAJ.MS.ID.555551 (2015)
however, production has been increasing due do rise in yield.
Presently the major cotton exporting countries include the United
States, India, Uzbekistan, Brazil and Australia. The United States
is the largest exporter followed by India and Uzbekistan, while
the major importers of cotton are China, Turkey, Bangladesh and
Pakistan.
In India, 60% of the total cropped area is classified as dry
land or rain fed area representing 40% of the total agricultural
production. Cotton is one of the major commercial crops where
70% of the crop is under rainfed conditions. The area under cotton
crop constitutes almost 9% of the total area under agriculture.
This commercial crop is an important raw material for India’s
textile industry that is one of the largest and oldest industries
accounting for about 14% of the national industrial production
and contribution about 5% to GDP. Cotton is cultivated in three
distinct agro-ecological zones (North, Central and South) of the
country. Approximately 65% of India’s cotton is produced on dry
land and 35% on irrigated lands. The northern zone is almost
irrigated, while the percentage of irrigated area is much lower
in southern zones (40%) and the lowest being in central zone
001
Agricultural Research & Technology: Open Access Journal
(23%), which is nearly 60% of cotton area of our country.
India produces a wide range of cotton varieties, which are
grouped into five categories on the basis of their staple length.
There are; (a) short staple (b) superior medium staple (d) long
staple (e) superior long staple. The northwestern belt of India
comprising of Punjab, Haryana and Rajasthan specializes mainly
in short and medium staple varieties, while southern and western
parts of India produce long and superior long staple varieties.
Eighty-five % of the cotton is grown in ten major countries of the
world among which India stands second in production (http://
cotcorp.gov.in).
Data and Methodology
Data on the area, production and productivity of cotton
from the year 1981-82 to 2008-09 for the nine major cotton
growing states was obtained from Centre for Monitoring Indian
Economy Pvt. Ltd. (CMIE). The growth in the area, production
and productivity of cotton across the states and country and
cotton exports were studied for the time series data (19852008). Though cotton is traded in various forms like raw cotton,
yarn, sewing thread etc. In this study the raw cotton exports are
considered. The raw cotton is exported as cotton: not carded
or combed and cotton waste was used in the analysis. For the
purpose of the analysis, the cotton exported was grouped into
five types based on their staple length as (a) Bangladeshi cotton
of 16 mm staple length (b) Short staple cotton of below 20 mm
(c) Medium staple cotton of 20 - 28.5 mm (d) Long and extra long
staple length of 28.5 mm - 34.5 mm and above (e) Cotton waste
as ‘Others’. The data were analysed in two periods based on the
availability of data and the study period was divided into period I
(1981 to 1994) and period II (1995 to 2007).
The data on the exports were taken from the various issues
of the Monthly Statistics of Foreign Trade, DGCIS, Kolkata and
Table 1: State wise area, production and productivity under cotton in India.
S. No
States
1
Andhra
Pradesh
3
Haryana
2
Gujarat
4
Karnataka
6
Maharashtra
8
Rajasthan
5
7
9
Madhya
Pradesh
Punjab
Tamil Nadu
India
Area (Lakh hectares)
Period I
Period II
% Change
6.12
10.52
71.96
(8.17)
(11.94)
12.22
18.09
47.95
(16.32)
(20.51)
4.43
5.68
28.26
(5.91)
(6.44)
6.89
4.91
-28.79
(9.20)
(5.56)
5.40
557
3.24
(7.21)
(6.32)
26.63
30.45
14.37
(35.56)
(34.54)
6.43
5.74
-10.66
(8.59)
(6.52)
4.08
4.79
17.40
(5.45)
(5.43)
2.37
1.63
-31.28
(3.16)
(1.85)
74.89
88.16
17.73
(100.00)
(100.00)
Note: One bale is equal to 170 Kg
002
the official website of FAO (www.faostat.fao.org) was also used.
To study the performance and composition of exports % shares
were worked out on triennium basis. The annual compound
growth rate (ACGR) was computed to examine the trends in
exports. The Revealed Comparative Advantage (RCA) / Export
Performance Ratio (EPR) were used to identify the comparative
advantage or disadvantage India has for cotton. The index used
in this study was according to Balassa [4] using the equation (1)
RCA =
Sit
S wt
(1)
Where,
Sit = Share of cotton exports in the India’s total export, and
Swt = Share of cotton exports in the total world exports
When RCA is greater than unity the country is said to have
comparative advantage in that commodity. However, RCA suffers
from the problem of asymmetry. The index is made symmetry by
the methodology followed by Dalum et al. [5] (1998) as Revealed
Symmetric Comparative Advantage. It is expressed by equation (2):
RSCA =
( RCA − 1)
( RCA + 1)
(2)
It varies from -1 to +1 and a commodity is said to have a
comparative advantage in its exports if the RSCA value is positive
and vice –versa.
Results and Discussion
Area, production and productivity of cotton and their
growth
The nine major cotton growing states in India namely, Punjab,
Production (Lakh Bales)
Period I
Period II % Change
9.29
21.22
128.41
(10.32)
(12.75)
15.82
43.49
174.96
(17.56)
(26.13)
9.63
13.78
43.12
(10.69)
(8.28)
7.23
7.04
-2.68
(8.03)
(4.23)
3.17
6.23
96.47
(3.52)
(3.75)
16.59
33.94
104.56
(18.42)
(20.40)
17.03
16.21
-4.82
(18.91)
(9.74)
6.76
8.20
21.19
(7.51)
(4.93)
4.00
2.82
-29.47
(4.44)
(1.70)
90.05
166.40
84.78
(100.00)
(100.00)
Productivity (Kg/Ha)
Period I
Period II % Change
257
336
30.52
365
420
14.88
218
187
383
245
75.99
31.32
101
184
81.94
451
485
7.57
106
277
284
204
189
77.61
306
10.24
318
55.64
303
6.85
How to cite this article: Samuel J, Basavaraja H, Pushpanjali, Rejani R. Production, Growth and Export Competitiveness of Raw Cotton in India –
an Economic Analysis. Agri Res Tech Open Access J. 2015;1(1): 555551. DOI: 10.19080/ARTOAJ.2015.01.555551
Agricultural Research & Technology: Open Access Journal
Haryana, Rajasthan, Gujarat, Maharashtra, Madhya Pradesh,
Andhra Pradesh, Karnataka and Tamil Nadu were considered
for the study. These states put together cover 99% of the area
and production in the country. The average area, production and
productivity of cotton and their growth were analyzed.
Area, production and productivity of cotton in India
The state wise area of cotton showed in Table 1. indicated
that, during the period I, the cotton cultivated area was the
highest in Maharashtra (35.50%) followed by Gujarat (16.32%),
Karnataka (9.20%), Andhra Pradesh (8.17%), Punjab (8.51%),
Madhya Pradesh (7.21%), Haryana (5.91%), Rajasthan (5.45%)
and Tamil Nadu (3.16%). The cotton area in India was 74.89
lakh hectares during period I. During the period II the average
area of cotton increased to reach 88.16 lakh hectares. Thus,
there was an increase of 17.73% in the cotton cultivated area.
In the states of Maharashtra, Gujarat, Andhra Pradesh, Haryana,
Rajasthan and Madhya Pradesh, the average of cotton cultivated
area has increased only in Gujarat (20.51%), Andhra Pradesh
(11.94%) and Haryana (5.68%), respectively. The % change
of cotton cultivated area in the period II over the period I was
highest in Andhra Pradesh (71.96%) followed by Gujarat
(47.95%), Haryana (28.20%), Rajasthan (17.40%), Maharashtra
(14.37%) and Madhya Pradesh (3.24%), respectively. The area
under cotton in the states Karnataka, Punjab and Tamil Nadu has
declined during period II compared to period I.
The state wise production of cotton during the period I and
period II is given in Table 1. During the period I, the average
production was highest in Punjab (17.03 lakh bales) with a
highest share of 18.91% followed by Maharashtra (18.42%),
Gujarat (17.56%), Haryana (10.69%), Andhra Pradesh (10.32%),
Karnataka (8.03%), Rajasthan (7.5%) and Tamil Nadu (4.44%),
respectively. During the period II, Gujarat was the largest
producer of cotton with average production of 43.49 lakh bales
sharing 26.13% followed by Maharashtra (20.40 %), Andhra
Pradesh (12.75%), Punjab (9.74%), Haryana (8.28%), Rajasthan
(4.93%), Karnataka (4.23%), Madhya Pradesh (3.75%) and
Tamil Nadu (1.70%), respectively. The % change in cotton
production during period II over period I was the highest for
Gujarat (174.97%) followed by Andhra Pradesh (128.41%),
Maharashtra (104.56%), Madhya Pradesh (96.47%), Haryana
(43.12%) and Rajasthan (21.19%), whereas Karnataka (-2.68%),
Punjab (-4.82%) and Tamil Nadu (-29.47%) witnessed decline in
production from period I to period II. The average production of
cotton in the country was 90.05 lakh bales during Period I which
increased to 166.40 lakh bales in the period showing a change of
84.78% between the two periods.
The state wise performance of productivity of cotton in India
is given in Table 1. During the period I, the productivity was
highest in Punjab with 451 kg/ha followed by Haryana with the
productivity of 365 kg/ha. The productivity of cotton in Andhra
Pradesh, Gujarat, Rajasthan, Tamil Nadu was between 200 kg/
ha and 300 kg/ha, whereas the productivity was below 200 kg/
ha for Karnataka, Madhya Pradesh and Maharashtra. The lowest
productivity was observed in Madhya Pradesh (101 kg/ha).
During the period II, the productivity of cotton was better in all
the major cotton growing states. Punjab and Haryana retained
their position in India with the productivity of 485 kg/ha and 420
kg/ha, respectively. The analysis of % change in the productivity
of cotton revealed that the productivity of cotton in all the states
increased between the two periods. The highest % change was
noticed in Madhya Pradesh (81.94%), Maharashtra (77.61%)
and Gujarat (76%) while the least change was were observed in
Tamil Nadu (6.85%). The productivity of cotton for the country
as a whole is increased from 210 kg/ha in period I to 318 kg/ha
in the period II with a change of 55.64%. The introduction of Bt
cotton has brought about a significant increase in the productivity
of cotton in the country.
The obtained data presented in Table 2 showed that,
the growth of cotton cultivated area in India was negative in
period I while the production and productivity showed positive
growth. on the other hand, the state wise analysis of growth in
cotton cultivated area showed that, Haryana and Andhra Pradesh
showed significant annual increment of 4.49% and 4.7%,
respectively while Karnataka, Tamil Nadu, Gujarat and Madhya
Pradesh and for country as a whole witnesses annual decrement
Table 2: Compound growth rates of area, production and productivity of cotton in India.
S.no
Particulars
1
2
3
4
5
6
7
8
9
Andhra Pradesh
Gujarat
Haryana
Karnataka
Madhya Pradesh
Maharashtra
Punjab
Rajasthan
Tamil Nadu
India
Note:
*** denotes significance at 1 per cent
** denotes significance at 5 per cent
* denotes significance at 10 per cent
003
Area
4.7***
-3.96
4.49***
-4.9
-1.40
0.22
0.61
1.08
-0.007
-0.67
Period I
Production
6.66***
-2.90
6.22***
1.42
1.60
1.51
6.16***
5.08**
1.59
2.66***
Productivity
1.80
1.10
1.66*
6.84***
3.03**
1.27
5.50**
3.99**
1.60
3.36***
Area
1.18
4.41***
-0.97
-3.95
2.03*
0.39
-1.49
-3.59
-7.4
0.53
Period II
Production
4.27***
9.38***
2.81*
-3.8
5.00***
4.65**
3.55
-3.33
-6.9
4.47**
Productivity
3.06**
4.77*
3.82**
1.2
3.55**
4.26**
5.13
0.27
0.57
3.91**
How to cite this article: Samuel J, Basavaraja H, Pushpanjali, Rejani R. Production, Growth and Export Competitiveness of Raw Cotton in India –
an Economic Analysis. Agri Res Tech Open Access J. 2015;1(1): 555551. DOI: 10.19080/ARTOAJ.2015.01.555551
Agricultural Research & Technology: Open Access Journal
Table 3: Export composition of cotton from India for TE 1988 to 2006.
(Quantity in thousand tonnes and value in million rupees)
S.no
1
2
3
Particulars
Period I
Period II
Percentage
change
Quantity (Tones)
99343
310708
212.76
Unit Value (Rs/
kg)
25.07
50.93
103.12
Value (Lakhs)
23997
166107
592.20
Note: Figures in parentheses indicate percentages to column total.
in area. In the case of production and productivity Punjab,
Haryana, Rajasthan, Madhya Pradesh, Karnataka and country as
a whole showed significant positive growth.
During the period II only Gujarat and Madhya Pradesh
showed a significant growth in the area while states like Punjab,
Haryana, Rajasthan, Karnataka and Tamil Nadu recorded a
negative growth. The production and productivity scenario in the
period II revealed that the states like Gujarat, Maharashtra and
Madhya Pradesh which did not show significant growth in period
I showed a significant positive growth. While the southern states
of Tamil Nadu and Karnataka showed no significant growth.
Composition of cotton exports from India
India has been exporting all types of cotton in a sizable
quantity from 1980 onwards and has shifted from a cotton deficit
country to a surplus exporting country with a considerable
reduction in the imports [6]. The exports of cotton are categorized
into different types and their composition in quantitative and
value terms are presented in the Table 3.
The export of cotton has increased from an average
86.31 thousand tones in the triennium ending (TE) 1988 to
277.09 thousand tones in TE 2006. In value terms, it has increased
from Rs 1,222.79 million to Rs 12,949.61 million. The exports
of all the five staple lengths of cotton except small and medium
staple length have consistently increased. In case of Bengal desi,
cotton exports increased from 6.04 thousand tones to 57.71
thousand tones during TE 2006 but declined to 6.85 in TE 2003.
In case of long and extra long staple length type, an increase
from 39.79 thousand tones to 129.97 thousand tones is noticed.
The Bangladeshi-short staple desi cotton is traditionally being
exported from India for non-spinnable uses and is in demand for
extra factory uses. The international decrease in cotton prices
was the main factor behind the loss in competitiveness of Indian
short staple cotton in mid 1990s along with the increase in
subsidies in the United States [7,8].
The long and extra type of cotton has registered the
highest share of above 40% except for TE 2000 and 2003 where
the medium and Bengal desi type showed the highest share. The
decrease in cotton exports during the TE 2000 and TE 2003 may
be due to reasons of drought and crop failure, especially when
the production decreased from 167.0 lakh bales to 140 lakh bales
in 2002-03 and can be attributed to the increase in the domestic
consumption through textile industries. It is evident from the
obtained results that the long and extra type of cotton is more
004
preferred for the exports because of its superior quality and
its preferable use in spinning and fabric manufacturing. India’s
species composition of cultivated cotton has changed over the
years and it released extra long staple variety in the 1970s like
Sankar 4 and 6 (hybrid), MECH 1 etc., which are in demand from
abroad and has shown improvement in qualitative aspects of
Indian cotton. The total exports of cotton from India shown in
Table 4 where a significant increase can be noticed in the exports
over years [6]. The % change in the quantity of export was 212.76;
while for value and unit value, it was found to be 592.20 and
103.12. It is evident that there has been a noticeable increase in
the cotton exports and confirms that India is the major exporter
of raw cotton in the world.
Export competitiveness of cotton
The Export Performance Ratio (EPR) / Revealed Comparative
Advantage (RCA) and Revealed Symmetric Comparative
Advantage (RSCA) for the export of cotton from India are
presented in Table 4 & 5. It can be seen that RCAs are below unity
till 2002 and in 2004. The ratio has been increasing from 2005
onwards. The comparative advantage in cotton exports showed
a significant increase from 0.17 in 2000 to 9.58 in 2007. The
RCA suffers from the problem of asymmetry as pure RCA is not
comparable on both sides of unity, as index ranges from zero to
one, if a country is said not to be specialized in a given sector,
while value of index ranges from one to infinity ,if a country is
said to be specialized [9]. The estimated RSCA indices give a
clear indication of comparative advantage of India in cotton and
the indices reveal that India’s comparative advantage in cotton
exports is increasing over the years. The value of RSCA was
-0.70 in 2000 and fell to -0.77 in 2002 but kept increasing in the
following years. The RSCA value shows an increasing trend from
-0.70 in 2000 to 0.81 in 2007. The positive RSCA from 2005 can
Table 4: Cotton exports from India.
S.no
1
2
3
Particulars
Period I
Period II
Percentage change
Quantity (Tones)
99343
310708
212.76
Unit Value (Rs/kg)
25.07
50.93
103.12
Value (Lakhs)
23997
166107
592.20
Table 5: Revealed Comparative Advantage (RCA) and Revealed
Symmetric Comparative Advantage (RSCA) for cotton.
Year
Cotton Exports
EPR/RCA
RSCA
2000
0.1734
-0.7045
2002
0.1283
-0.7726
2001
2003
0.0692
1.5357
-0.8705
0.2113
2004
0.5570
-0.2845
2006
7.3932
0.7617
2005
2007
4.5348
9.5872
0.6387
0.8111
How to cite this article: Samuel J, Basavaraja H, Pushpanjali, Rejani R. Production, Growth and Export Competitiveness of Raw Cotton in India –
an Economic Analysis. Agri Res Tech Open Access J. 2015;1(1): 555551. DOI: 10.19080/ARTOAJ.2015.01.555551
Agricultural Research & Technology: Open Access Journal
be attributed to the increase in the exports due to the increase in
cotton productivity with the introduction of Bt technology. The
domestic production has exceeded the domestic consumption
and with the good market the farmers got for cotton; India has
emerged as a major exporter in the world.
Conclusion
Cotton is one of the major rain fed crop in the country,
making India the second largest producer and a major exporter
in the world. There was a significant increase in the production
and productivity of cotton in the country, though area increase
was meagre. India has been exporting all types of cotton in a
sizable quantity from 1980 onwards where in the long and extra
long staple type of cotton had registered the highest share of
above 40%. The estimated RSCA indices give a clear indication
of comparative advantage of India in cotton and the indices
reveal that India’s comparative advantage in cotton exports is
increasing over the years.
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How to cite this article: Samuel J, Basavaraja H, Pushpanjali, Rejani R. Production, Growth and Export Competitiveness of Raw Cotton in India –
an Economic Analysis. Agri Res Tech Open Access J. 2015;1(1): 555551. DOI: 10.19080/ARTOAJ.2015.01.555551