While China grants duty-free access to cotton yarn from Pakistan and Vietnam, Indian cotton yarn exports to China face a levy. This has adversely impacted Indian cotton yarn exports. Till last year, Indian cotton yarn exports to China constituted around 30 per cent of the country’s exports. In June and July, Indian cotton yarn exports to China successively reduced by more than 80 per cent. Cotton yarn exports to China fell 61 per cent in the April to July period this year from a year ago. In the same period, total cotton yarn exports contracted by 37 per cent.

Cotton yarn sector is a crucial pillar of India’s textile industry. Pakistan’s manufacturers will get bolstered because of free access to such a big market and increase their presence. Pakistan and China have a strategic give-and-take partnership, with the former providing connectivity and the latter giving economic concessions. India has become collateral damage in this process. India which has wanted to reduce its trade deficit with China now has a serious competition in Pakistan.

But it is also true that Indian cotton yarn exports have been hit because global demand has fallen and prices have collapsed.