India’s cotton yarn production is expected to increase only marginally in fiscal ’20.

After remaining largely range-bound in fiscal ’18, cotton yarn production in India saw a three per cent growth in fiscal ’19. Overall export demand for cotton yarn remained strong during fiscal ’19 on account of high demand from China, coupled with competitive prices in the international market. However, domestic yarn demand continues to be sluggish with substitution taking place from manmade fibers. During the first half of fiscal ’20, cotton yarn prices witnessed a marginal uptick of about 2.7 per cent on the back of increased raw material prices in the market. However, yarn demand for domestic players remained subdued in the export market during the same period owing to higher domestic cotton prices compared to international prices of the fiber. Also, demand from China remained weak on the back of free trade agreements with Pakistan, which competes directly with India’s cotton yarn.

During fiscal ’19, as much as 40 per cent of the total cotton yarn was exported to China, followed by 18 per cent to Bangladesh, five per cent to Pakistan and to Egypt and three per cent or four per cent to Vietnam.