Shruti Lashkari, Fri July 4,
Increased Domestic Consumption of Cotton Yarn Supports Value Addition
Chennai: Amidst slower exports, cotton yarn mills have seen traction in domestic demand. Increased consumption by downstream industries has been supporting higher value addition while helping yarn producers register sales growth. Cotton yarn exports fell by 5 per cent in FY25 due to weak offtake from China. Bangladesh, China, and Vietnam collectively account for around 59 per cent of Indian cotton yarn exports. In FY2025, export volumes to China dipped by 66 per cent.
However, domestic yarn consumption, which accounts for 67 per cent of the production, grew 2 per cent, offsetting the lower export demand. The industry is likely to further shift gears in FY2026, with yarn demand likely to gain traction from the healthy prospects in domestic demand, especially with strong off-take from downstream segments like apparels, which are benefiting from global vendor diversification programmes.
Apparel exports grew 10 per cent in FY25 to $15.9 billion, with demand from the US and Europe. The bilateral trade deals with different countries are expected to further increase apparel exports in FY26. ICRA expects domestic spinners to report a sales volume growth of 4-6 per cent and 6-9 per cent revenue growth in FY26. The Indian cotton spinning industry has seen a modest recovery in FY2025. This follows a period of subdued demand from end-segments in the preceding two years. Higher yarn consumption by downstream industries supports higher value addition and increased employment generation, in turn improving overall export growth. Despite slower yarn exports, the total textile exports grew 6.32 per cent to $36.6 billion in FY25.