This study investigates the performance and price discovery functions of spot and futures markets for cotton in India, specifically focusing on cotton fibre and cottonseed oilcake traded on the National Commodity and Derivatives Exchange (NCDEX). Using time-series data from 2010–2018, the research assesses market efficiency through econometric tools including cointegration tests, Vector Error Correction Models (VECM), Granger causality, and variance decomposition. The results show a long-run equilibrium relationship between spot and futures prices; however, the futures market does not lead the spot market, as evidenced by unidirectional causality from spot to futures prices. The study concludes that while cotton futures contracts have some predictive power, they fall short in fully integrating price information and performing effective risk management. Policy measures such as enhancing farmer participation, improving grading systems, and integrating e-NAM with futures trading are recommended to strengthen market efficiency.