In FY24, India’s yarn exports experienced significant growth, with shipments to China increasing from 10 percent in FY23 to 21 percent. This surge is attributed to competitive prices of Indian cotton and the issues surrounding Xinjiang cotton, which are expected to sustain export momentum into FY25.
Cotton yarn exports saw an 83 percent rise in FY24. The share of yarn exports reached 32 percent of India’s total production in FY24, compared to 19 percent in FY23. This growth was primarily driven by increased demand from China, which is facing allegations of forced labor in Xinjiang cotton production. Consequently, China’s share of India’s yarn exports rose to 21 percent, up from 10 percent in FY23. Bangladesh, China, and Vietnam together account for 60 percent of Indian cotton yarn exports.
Domestically, cotton fiber prices, which had hit record highs in the first half of FY23, gradually declined in the second half. In FY24, prices fell by 25 percent compared to the average prices in FY23 due to weak domestic demand, according to ICRA.
Despite an estimated 6 percent drop in cotton fiber production for 2024, caused by reduced sown areas amid uneven rainfall, a carry-over surplus is expected to support consumption and stabilize prices.
The Red Sea conflicts have not significantly impacted cotton yarn exports, as the primary export destinations are Bangladesh, China, and Vietnam. However, prolonged conflicts could eventually affect apparel export volumes and subsequently impact cotton yarn exports.
Domestic spinners are anticipated to see a volume growth of 4-6 percent in FY25, driven mainly by increased export volumes to Bangladesh and China, thanks to competitive yarn prices and a sluggish recovery in domestic demand.
