Cotton spinning mills in India are resorting to partial shutdown as a squeeze in demand from China and Bangladesh has accumulated yarn stocks, a potential risk for millers in a dwindling cotton market.
“The global cotton yarn demand is under stress as GDP growth in China has fallen and there are recessionary trends in major cotton markets including Bangladesh,” Dr Siddhartha Rajagopal, executive director, Cotton Textiles Export Promotion Council, told ET.
He said that the slide in export of cotton yarn is worsened by low margins in Indian cotton market due to higher domestic prices. Rajagopal pointed that Indian cotton yarn manufacturers are also losing the global trade due to China’s access to duty-free market in Pakistan and Vietnam.
India is the worlds’ largest exporter of cotton yarn and has major markets in China, Bangladesh, Pakistan, Vietnam and South Korea. Yarn export to China had gone up in 2018-19 as the largest importer of the natural fibre bought a third of total yarn export from India. The export has increased by 72 per cent to Vietnam in the last year.
This year, yarn exports are down to China, Bangladesh, Pakistan and European markets. The millers who are turning to domestic market are again feeling the heat due to a spike in dutyfree garment imports from Bangladesh. The import of garments from Bangladesh has jumped by 82 per cent in 2018-19 to $ 365 million — much of it made from dutyfree fabric coming from China.