After a year of economising, the world is again willing to spend on new clothes, curtains, towels and upholstery. That has created a rich profit opportunity for India’s cotton farmers, who are benefiting from brisk exports and rising local prices as textile companies rush to buy raw material.

India is the world’s second largest cotton producer. The country’s cotton acreage crossed a record 10 million hectares in 2009 despite the poor monsoon, though the dry weather affected yields.

Cotton exports are progressing at a good pace. India has already exported 3 million bales till now mid-way in the season. Last year, India had exported 5 million bales in the full year, said Textile Commissioner AB Josey.

Total exports at the end of the 2009-10 seasons are expected to touch 6.5 million bales, according to officials at the industry body Cotton Association of India.  China is India’s top customer for cotton, which in turn is the biggest garment and textile exporter to the United States. The USA, the world’s top cotton producer, exports cotton to China and imports textiles.

The demand for textiles has recovered sharply in the last few months and companies are ramping up production to meet orders. That has raised the demand for raw material, said a Leading Broker in Mumbai.

The biggest threat to India’s exports now is the volatile price of cotton futures on New York Mercantile Exchange. If Nymex futures dip sharply, that would make cotton from the USA, world’s top exporter, more affordable for buyers in China as well as Indian textile companies, who might be tempted to import from overseas.