The ban, which has prompted a spike a global cotton prices, comes as textile firms in India raised concerns that the current large quantities of exports would cut availability in the domestic market.

India is the world's second largest exporter of cotton and most of its shipments go to China, the world's largest user of the fibre. In a statement, the country’s Directorate General of Foreign Trade said: "Export of cotton has been prohibited till further orders. Export against registration certificates already issued will also not be allowed," the notification said.

India had already exported 8.5 million bales, higher than government estimates made in January of 8.4 million bales of 170 kilograms each for the year, on strong demand from China. Over 80% of exports so far have headed to China.

Traders in India had signed contracts for nearly 10 million bales in total for export at $1.01-$1.03 per lb, including those already shipped.

International cotton prices rose with the May cotton contract on ICE up 4.3% to $0.92 per lb. India’s last export ban in 2010 led to a record highs in cotton markets with prices topping $2.20.

However, analysts have suggested that this latest export ban may not lead to such a huge surge because global cotton stocks have increased while consumers are also buying more synthetic fabric, a possible knock-on effect of the events in 2010.

Elsewhere, Australia, the world’s fourth-largest cotton supplier, has said it expects less price distortion because of record production and a reduction in demand from the US and Europe.