Cotton makes up 51 per cent of the total raw material cost in the Indian textile industry. It continues to remain at a higher level, thereby pressurising domestic industry margins.

Globally, the spread between international cotton prices and domestic cotton prices has been on a declining trend owing to higher production in Brazil and China, aided by lower production in India. This decreasing price spread, along with a gradual improvement in demand, provides the much-needed respite for cotton industry players. Capital expenditure in textiles has been majorly to replace machines with new technologies.

Meanwhile, yarn production has been fluctuating over the last six months, although the production average has been maintained. Exports have risen to more than 30 per cent during March 2019. Prices of cotton yarn are co-related to raw cotton prices and thus have seen an upward movement in line with raw cotton prices. Synthetic fabrics have seen a gradual revival in demand due to decreased cost of production. Falling crude oil prices have made synthetics more competitive against increasing cotton prices. Partially-oriented yarn and texturised yarn prices declined by eight per cent and seven per cent month-over-month respectively. Overall apparel production improved by about 34 per cent year-on-year and exports improved by 18 per cent year-on-year.