Cotton prices are declining in India.The main reason is pressure from international cotton prices owing to higher production in some nations. However, with muted demand for yarn from China, Indian yarn manufacturers are suffering with idle capacities and production losses. While yarn manufacturers are facing headwinds on the export front, the poor offtake of yarn from the domestic fabric industry will ensure that the current sub-normal capacity utilisation levels continue. Yarn production is expected to fall by five per cent or eight per cent in fiscal 2019-20 owing to lower demand from China and volatility in cotton prices. Synthetic or manmade fiber has seen a stabilisation in prices with support from almost stable crude prices in the second quarter of this fiscal. Further, the improving spread with cotton has made manmade fiber a more lucrative sub-sector for the textile market. But cotton contributes over half of the raw material in India’s textile sector.

Readymade garment exports have started improving with the end of the first quarter and the beginning of the second quarter. With incentives, exports are benefitting up to five per cent. These incentives aim at helping India cope with Vietnam and Bangladesh that have improved their market share in the global textile industry.