FW
Just days after the Indian government withdrew Quality Control Orders (QCOs) on Polyester Textured Yarn (PTY) and other textile inputs to boost the cost-competitiveness of the downstream industry, the Directorate General of Trade Remedies (DGTR) has initiated a fresh anti-dumping investigation into PTY imports originating from or exported by the People's Republic of China (China PR). This immediate counter-move by the domestic PTY manufacturers, led by industry giants, sets up a direct conflict that could see the benefits intended for India’s exporters completely nullified by new protective duties.
The Core Conflict: QCO relief vs. Anti-Dumping protection
The recent withdrawal of QCOs on PTY was hailed as a significant relief by the downstream textile sector (garment and home textile manufacturers).
● QCOs impact: Previously, QCOs mandated BIS certification, which was a time-consuming and expensive process, especially for foreign suppliers. This restricted supply and pushed domestic PTY prices 15–30% above global benchmarks, hurting the export competitiveness of Indian textiles.
● QCO rollback goal: The rollback was intended to ease regulatory burdens and allow manufacturers access to raw materials at internationally competitive prices, improving their standing in the global Man-Made Fibre (MMF) market.
However, domestic PTY producers (the upstream industry) are now fearing a surge in aggressively priced imports from China, a global leader in PTY manufacturing, following the removal of the QCO protection. The new anti-dumping probe is a direct response to this threat.
● Anti-Dumping allegation: The applicants, including Reliance Industries Limited and Wellknown Polyester Limited, allege that PTY from China PR is being dumped in the Indian market at prices below its normal value, causing material injury to the domestic industry.
● Injury evidence: Prima facie evidence accepted by the DGTR shows that imports have increased significantly in volume (absolute and relative terms) during the Period of Investigation (POI). The domestic industry is reportedly experiencing price suppression/undercutting, financial losses, cash losses, and a negative return on capital employed.
DGTR's Prima Facie Findings
"The applicants are in losses and are incurring cash loss. Further, the applicants have earned a negative return on capital employed.", mentions DGTR Initiation Notification, citing the applicants' injury claim. The DGTR initiation notification, dated November 20, 2025, outlines the foundation of the investigation:
● Product Under Consideration (PUC): Polyester Textured Yarn (PTY), also known as Drawn Textured Yarn (DTY), classified under HS Code 5402 33 00. Exclusions include PTY made from non-PET materials like nylon, polypropylene, and polyethylene.
● Subject Country: China PR.
● Period of Investigation (POI): April 1, 2024, to June 30, 2025 (15 months).
● Basis of Dumping: Since China PR’s costs and prices may not be market-driven, the DGTR, for initiation purposes, determined the Normal Value based on the export price of PTY from a third country (proposed as Singapore to India).
● Dumping Margin: A comparison of the Normal Value and the Export Price (based on DG Systems data) showed a dumping margin that is above the de minimis level and significant, providing sufficient prima facie evidence for initiation.
Will the QCO removal impact be negated by Anti-Dumping Duty?
The benefits of the QCO rollback for the downstream industry are highly likely to be negated if the DGTR recommends, and the Ministry of Finance imposes, a definitive Anti-Dumping Duty (ADD).
The goal of the QCO removal was to lower input costs, while the goal of the ADD is to impose a duty that raises the price of dumped imports up to the "normal value" or to an extent that eliminates the injury to the domestic industry. If a duty is imposed, it would effectively re-introduce a price barrier on Chinese PTY imports, driving up the raw material costs for downstream Indian manufacturers, thus undoing the competitiveness gains achieved by the QCO withdrawal.
Challenges & future plans
The immediate consequence is a fierce trade policy debate pitting the upstream producers against the downstream exporters.
|
Stakeholder |
Perspective & Plan |
Challenge to Trade Policy |
|
Upstream Domestic PTY Producers (e.g., RIL, Wellknown) |
Seek ADD to eliminate unfair price injury from Chinese imports, safeguard market share, and restore profitability/return on capital. |
Risk making PTY uncompetitive again for downstream exporters, potentially forcing them to use inferior domestic substitutes or curtailing exports. |
|
Downstream Textile Exporters (Garments, Home Textiles) |
Want open imports at global prices (benefit of QCO rollback) to boost global competitiveness and achieve India's textile export targets. |
Face the challenge of increased input costs if ADD is imposed, which negates QCO benefit and jeopardizes their global price competitiveness. |
|
Government/DGTR |
Must balance the protection of the domestic PTY manufacturing industry (upstream) from dumping against the need to ensure low-cost raw materials for export-intensive sectors (downstream). |
The two trade remedy actions (QCO rollback and ADD initiation) appear contradictory, creating regulatory uncertainty in the polyester value chain. |
The DGTR has invited all interested parties, including exporters, importers, and the Chinese government, to submit information and comments on the scope of the PUC and PCN methodology within strict deadlines. The final recommendation will determine if India prioritizes domestic PTY manufacturing protection or the broader, export-oriented downstream textile value chain.
The full implementation of India's four consolidated Labour Codes (The Code on Wages, The Industrial Relations Code, The Code on Social Security, and The Occupational Safety, Health and Working Conditions Code) marks a strategic overhaul of the country’s industrial framework, particularly benefiting the export-driven textile and apparel sector. This modernization is a direct response to rising global demands for ethical sourcing and social accountability, exemplified by the European Union’s upcoming Corporate Sustainability Due Diligence Directive (CSDDD). Industry experts view the codes as a critical tool to ensure Indian factories are audit-ready, strengthening the supply chain's ability to maintain high compliance standards necessary to access major international markets.
The four new consolidated Labour Codes represent a strategic and historic overhaul of India's labour ecosystem, replacing 29 fragmented central laws with a unified framework. These codes were made effective from November 21, 2025, with the goal of expanding social security, formalizing employment, and streamlining compliance to align with global standards like the European Union’s Corporate Sustainability Due Diligence Directive (CSDDD).
What are these four consolidated ‘Labour Codes’
1. The Code on Wages, 2019
This code consolidates four laws relating to wages, bonus, and equal remuneration.
● Universal ‘Minimum Wage’: Establishes a statutory right to minimum wages for all employees across the organized and unorganized sectors.
● National floor wage: Requires the Central Government to set a floor wage based on minimum living standards. State governments cannot fix minimum wages below this national threshold, ensuring uniformity.
● Wage definition standardisation: Standardizes the definition of 'Wages' across all four codes. Employers must ensure that at least 50% of the total remuneration qualifies as 'basic wages' (including basic pay and dearness allowance). This change is intended to increase the corpus for social security benefits like gratuity and pension.
● Overtime: Mandates that overtime work must be compensated at least twice the normal rate of wages.
2. The Industrial Relations Code, 2020
This code consolidates three laws governing trade unions, conditions of employment, and industrial disputes.
● Fixed-Term Employment (FTE): Provides clear legal sanction for fixed-term employees. FTEs are now entitled to the same wages, social security, and benefits (like medical cover and paid leave) as permanent workers on a pro-rata basis.
● Gratuity for FTEs: Critically, it allows fixed-term employees to qualify for gratuity after just one year of continuous service, formalizing employment for many workers, especially in the textile sector.
● Dispute resolution: Introduces a framework for the recognition of a sole Negotiating Union (with 51% or more support) to streamline collective bargaining and reduce disputes.
● Strikes and lockouts: Requires a mandatory 60-day notice period for workers planning a strike and employers planning a lockout, promoting industrial peace.
3. The Code on Social Security, 2020
This code consolidates nine laws related to social security provisions.
● Universal Social Security net: Extends social security coverage (including insurance, provident fund, and maternity benefits) for the first time to gig workers, platform workers, and all unorganized workers.
● Aadhaar-Linked portability: Mandates the creation of a national database for unorganized workers, issuing a unique, Aadhaar-linked ID that makes social security benefits fully portable across state borders for migrant workers.
● Expanded ESIC coverage: Extends the Employees’ State Insurance Corporation (ESIC) scheme coverage across India.
● Maternity benefits: Retains 26 weeks of paid maternity leave and requires establishments with 50 or more employees to provide creche facilities.
4. The Occupational Safety, Health, and Working Conditions (OSHWC) Code, 2020
This code consolidates 13 laws concerning safety, health, and working conditions for workers.
● Night Shift for women: Permits women to work night shifts in all establishments (including factories) with their consent and mandatory adequate safety measures. This is a major enabler for export-oriented units to run double/triple shifts and scale up production.
● Mandatory appointment letters: Makes the issuance of a formal appointment letter to every employee compulsory, furthering the formalization of employment.
● Health and Welfare: Mandates free annual health check-ups for all workers over 40 years of age in specific establishments.
● Paid Leave: Reduces the eligibility period for earning one day of annual paid leave from 240 days of work to 180 days.
Compliance and business streamlining
Collectively, the codes introduce systemic reforms aimed at promoting Ease of Doing Business and global compliance:
● Single compliance regime: Replaces multiple registration, license, and return requirements with a Pan-India single registration and license system.
● Inspector-cum-Facilitator: Replaces the punitive "Inspector" role with an "Inspector-cum-Facilitator" model, emphasizing guidance and compliance support over rigid policing.
● Decriminalization: Replaces imprisonment with monetary fines for many minor, first-time offenses, encouraging voluntary compliance.
Scaling production with worker welfare
A key feature impacting manufacturing scale is the provision permitting women to work night shifts with their consent and mandated safety measures. This change is a game-changer for the female-dominated garment industry, allowing factories to operate double or triple shifts and significantly boost overall production capacity to meet seasonal export peaks. Simultaneously, worker security is enhanced: fixed-term employees (FTEs) now qualify for gratuity after just one year of service, down from five years. This measure formalizes the employment of up to 110 million textile workers and reduces high attrition rates in labor-intensive units like spinning mills.
Major Indian textile players view this reform as essential for their growth plan. Arvind, with its robust retail presence, relies on a highly competitive and ethically compliant domestic supply chain. The predictable, formalized labor environment provided by the new codes helps its sourcing partners maintain their financial outlook while ensuring the social compliance required for brand reputation and continued retail expansion against global competitors. The Southern India Mills' Association (SIMA) hailed the reform as a "historic achievement" that facilitates a level playing field in compliance costs.
The Directorate General of Trade Remedies (DGTR) has issued an Initiation Notification (Case No. AD(OI) 50/2025, dated 20th November 2025), launching an anti-dumping investigation into imports of Polyester Textured Yarn (PTY), also known as Drawn Textured Yarn (DTY), originating from China PR. PTY is the critical synthetic raw material that underpins India’s strategic pivot towards Man-Made Fibre (MMF) fashion, which accounts for approximately 75% of global fibre consumption and is essential for athleisure and technical apparel.
Financial injury to integrated supply chain
The probe follows a substantiated application by domestic majors, alleging that the dumped imports have caused material injury. Evidence points to severe price suppression, with the domestic industry reporting losses and cash losses, alongside a negative return on capital employed over the period of investigation (April 2024 to June 2025). This instability in core raw material cost directly erodes the export competitiveness of Indian garment manufacturers, challenging national plans to scale up MMF capacity.
The investigation underscores the vulnerability of vertically integrated players, those having strategically invested in a new Performance fabrics production to capture global demand for high-value synthetics. The DGTR's intervention is seen as vital for protecting the financial outlook of the MMF base that ambitious textile growth depends upon.
India's Minister of State, Pabitra Margherita, has strongly affirmed the nation's readiness to seize the mantle of the dominant global textile and apparel manufacturing hub. This bold assertion reflects a significant shift in ambition, positioning the sector not merely as a large player but as the future leader in the international textile trade. The government and industry are actively collaborating to streamline processes, enhance efficiency, and ramp up capacity to meet and exceed global demand, thereby maximizing India's competitive advantage.
Policy foundation and investment drive
The foundation for this dominance is being built upon strategic policy initiatives designed to create a globally competitive ecosystem. Key among these are the Production Linked Incentive (PLI) Scheme and the establishment of PM-MITRA Mega Textile Parks . The PLI scheme is specifically aimed at encouraging large-scale investment in high-value segments like Man-Made Fibre (MMF) apparel and technical textiles, shifting reliance away from traditional cotton exports. The PM-MITRA Parks offer integrated infrastructure—from spinning to garment manufacturing, reducing logistics costs and time, making Indian products more competitive on the world stage.
Leveraging scale and sustainability
India's inherent strengths; a vast supply of raw materials (cotton, silk, jute, MMF), a skilled labor force, and a massive domestic market—provide the scale necessary for global leadership. Furthermore, a growing emphasis on sustainability and circularity in textile production is aligning Indian manufacturers with global consumer and regulatory trends. By prioritizing responsible sourcing and eco-friendly processing, the industry is enhancing its appeal to international buyers who increasingly demand transparency and green credentials. This comprehensive approach is what underpins MoS Margherita's confidence in achieving the projected goal of $100 billion in exports by 2030.
When Presidents Donald Trump and Xi Jinping announced a fragile peace in Busan last week, most of the attention in financial circles revolved around soybeans, chips, and rare earths. But beneath the surface, the most immediate tremor was felt in the world’s oldest commodity trade, cotton.
The temporary suspension of China’s 25 per cent retaliatory tariff on US cotton has revived one of the world’s most important agricultural and industrial linkages. For the first time since 2018, the global cotton economy, a $70 billion fiber market underpinning $350 billion worth of textiles is showing signs of structural realignment. This is not a boom; it is a reset one that restores old dependencies even as it exposes new vulnerabilities.
Cotton gets its corridor back
Cotton was among the first casualties of the US-China trade war. China, the world’s largest consumer of raw cotton, had slapped a 25 per cent tariff on American fiber in 2018, cutting US exports by almost half. The Busan truce reverses that penalty, giving Chinese mills access once again to high-quality American cotton.
Table: The direct cost impact of China’s tariff suspension on US cotton
|
Metric |
Pre-truce (25% tariff) |
Post-truce (0% tariff) |
Change/Impact |
|
US Cotton Import Tariff (China) |
25% |
0% |
-25 ppt (Percentage Point Reduction) |
|
Price of Imported US Cotton (per metric ton) |
$1,900 |
$1,520 |
↓ $380 (20% price drop for Chinese buyers) |
|
Average Cost to Chinese Spinning Mill |
High |
Lower |
8–10% Margin Gain (Due to lower raw material costs) |
|
US Cotton Export Volume to China (Annualized, est.) |
1.4 million tons |
2.1 million tons |
+50% Recovery (Significant boost to US exports) |
|
Global Yarn Price (average) |
$3.20/kg |
$3.10/kg |
↓ 3% (Immediate deflationary pressure on global yarn prices) |
Source: USDA, China Cotton Association, ICAC estimates
The tariff rollback translates into an instant $380-per-ton savings for Chinese mills. Spinners regain access to premium long-staple cotton, improving their yarn quality and restoring profitability lost to years of inflated input costs. For American growers particularly across Texas, Georgia, and Mississippi this reopening of the Chinese market revives demand that had collapsed under the tariff wall. Analysts expect US cotton exports to China to grow nearly 50 per cent year-on-year in 2025. Globally, cotton and yarn prices have reduced about 2-3 per cent, a temporary relief to mills in Bangladesh, Vietnam, and Turkey.
How the fiber flows shift
The Busan accord has started to recentralize cotton trade routes that had dispersed after the trade war began.
Table: Global cotton exports before and after Busan Truce (2024 vs. 2025)
|
Exporter |
Top import partner (2024) |
Export Share 2024 (%) |
Top import partner (2025E) |
Projected share 2025 (%) |
Status/Impact |
|
US |
Vietnam |
23 |
China |
31 |
Major Rebound: Shift back to China is a direct result of the tariff truce. |
|
India |
Bangladesh |
18 |
Bangladesh |
16 |
Slight Decline: Reflects domestic cost pressures and rising competition. |
|
Brazil |
Turkey |
14 |
Pakistan |
13 |
Marginal Loss: Losing minor share due to shifting global sourcing patterns. |
|
Australia |
China |
9 |
China |
11 |
Gaining Traction: Strengthening raw material supply to China. |
|
West Africa (C-4) |
Asia (mixed) |
7 |
Asia (mixed) |
7 |
Neutral: Stable supply to various Asian processing hubs. |
Source: International Cotton Advisory Committee (ICAC), trade shipment data, USDA forecasts
With the tariff barrier gone, US cotton is flowing back to China, reasserting a historic trade corridor that had fractured under political tension. India and Brazil, which had briefly benefited as alternative suppliers, now face moderated export growth. Australia, having re-entered the Chinese market in 2023 after diplomatic thaw, is strengthening its position in the high-grade segment. West Africa’s cotton exporters, Benin, Mali, Burkina Faso, and Chad remain steady but face pricing pressure due to increased US supply. The global cotton market is thus consolidating around two dominant poles: US supply and Chinese demand, recreating the dependency that the world had spent five years diversifying away from.
Pricing patterns: stability with fragility
The cotton market’s reaction to the truce was immediate. ICE futures grew briefly to $0.96/lb before settling near $0.89/lb, reflecting cautious optimism rather than exuberance.
Table: Benchmark cotton price movements (ICE and domestic indices)
|
Market |
October 2024 average |
November 2025 post-truce |
% Change |
Market sentiment |
|
ICE Futures (US cents/lb) |
84.5 |
89 |
+5.3% |
Stable Rebound: Reflects optimism from US growers due to guaranteed trade volume with China and a return to normal pricing. |
|
China Spot (Yuan/ton) |
¥15,200 |
¥14,700 |
-3.30% |
Input Relief: The lower price is a direct benefit of the truce (due to tariff removal on cheaper US cotton), giving Chinese mills a significant cost advantage. |
|
India Spot (Rs/candy) |
₹61,000 |
₹58,200 |
-4.60% |
Competitive Pressure: Indian cotton prices are forced down to compete with the cheaper global raw material benchmark set by China, squeezing mill margins. |
|
Brazil FOB Export ($/MT) |
$1,850 |
$1,730 |
-6.50% |
Weakening Exports: Brazil, a key competitor to the US, sees its export price fall sharply to maintain volume against the revitalized US-China trade channel. |
Source: ICE, Cotton Association of India, CEPEA Brazil, China National Cotton Exchange
The data shows that global cotton prices have stabilized within a narrow band, supported by China’s revived import appetite but capped by surplus supply. For mills, this means a return to predictable input costs, enabling long-term contract planning. For farmers, however, the price ceiling limits profit recovery, especially in India and Brazil, where domestic costs remain elevated.
Repercussions for competing producers
China’s resumption of US cotton imports has reshaped the competitive landscape for other producers:
• India: Faces downward price pressure domestically. Exporters are turning toward Bangladesh and Vietnam to offset reduced shipments to China.
• Brazil: Loses some volume to the US but benefits from a weaker Real, maintaining export competitiveness.
• Australia: Gains in long-staple cotton, where premium fiber quality secures niche demand.
• West Africa: Faces price compression due to global oversupply, challenging farmer incomes and cooperative stability.
Table: Cotton exporter profit outlook, 2025E
|
Country |
Avg. Export Price ($/MT) |
Est. Farmgate Cost ($/MT) |
Margin 2024 |
Margin 2025E |
Trend |
|
USA |
$1,520 |
$1,120 |
+22% |
+26% |
Improving |
|
India |
$1,580 |
$1,330 |
+16% |
+12% |
Declining |
|
Brazil |
$1,730 |
$1,340 |
+22% |
+18% |
Weakening |
|
Australia |
$1,950 |
$1,480 |
+24% |
+25% |
Stable |
|
West Africa (avg.) |
$1,600 |
$1,450 |
+9% |
+7% |
Deteriorating |
Source: USDA, ICAC, national export boards
The US is now the clear profitability leader, thanks to revived Chinese demand and lower shipping costs. India’s margins are slipping as domestic prices stay high relative to export benchmarks. West Africa’s margins are eroding sharply, exposing the vulnerability of smaller economies to global oversupply cycles.
While the Busan truce has calmed cotton markets, it has also reconcentrated power. China once again controls global demand, while the US dominates supply. This symbiosis may stabilize prices but deepens systemic risk — any future policy reversal could re-trigger disruption across the textile world. Analysts warn that the next 18 months will be marked by strategic stockpiling, as both Chinese mills and US exporters prepare for potential policy reversals in 2026. As a Shanghai-based cotton trader puts it, “This peace is threadbare it keeps the looms running, but everyone knows it could tear again.”
The fact is that the Busan truce has not triggered a cotton boom it has restored circulation to a system on life support. The US regains its biggest buyer; China reclaims its favorite fiber; prices settle into a cautious rhythm. But beneath the stability lies dependence. Cotton’s global map has been redrawn not by market forces but by political will a peace that holds only as long as diplomacy does. In 2026, when the temporary truce expires, the world’s most traded natural fiber may once again find itself caught between geopolitics and the spinning wheel.
The 50% US retaliatory tariff has delivered its full blow to India’s textile sector, with October 2025 exports seeing a devastating 12.91% year-on-year contraction in overall textile and apparel shipments, as per CITI data. Cotton yarn and fabric exports alone plummeted by 13.31%. This has triggered an acute liquidity crisis in North Indian hubs, forcing a radical shift in the industry's focus.
Europe emerges as the new anchor
Instead of merely battling the tariff-induced payment crises in hubs like Delhi and Ludhiana, the industry is now aggressively pivoting its export strategy towards the European Union (EU). With the EU market nearly twice the size of the US for textiles, and an India-EU Free Trade Agreement expected to be finalized by the end of 2025, exporters view this as a necessary, long-term structural change. As one industry leader stated, "The EU cannot replace US volumes immediately, but it is the future for tariff-free growth."
Relief package and diversification drive
In a bid to cushion the immediate impact, the Indian government has announced relief measures, including a four-month moratorium on loan repayments for the readymade garment segment and an extension of the export realization period. Textile conglomerate Arvind Limited, which has about 21% of its topline exposed to the US market, estimated a quarterly EBITDA impact of ₹25-30 crore from the tariffs, partially offset by increased volumes in other markets.
Simultaneously, the Production Linked Incentive (PLI) scheme is encouraging a shift to Technical Textiles, which are less tariff-impacted. The dual strategy; lobbying for a swift India-US trade deal while actively diversifying into technical textiles and the EU, underlines the industry’s drive to transform a short-term crisis into a mandate for long-term global competitiveness and market expansion.
India's downstream apparel sector has received a critical boost to its global competitiveness following the government's revocation of Quality Control Orders (QCOs) on intermediate man-made fibres (MMF) like polyester and viscose yarn. This regulatory rollback, analyzed by Crisil Ratings, is strategically timed to mitigate the severe impact of a 50% US tariff on Indian textile exports, which contributed to a 12.91% cumulative decline in overall textile and apparel exports in October.
The QCOs had previously inflated raw material costs by 10-30% above global rates, eroding the cost efficiency of the 'Readymade Garment' segment—which contributes 25–30% of its revenue from exports. By restoring seamless access to internationally competitive MMF inputs, Indian manufacturers gain essential cost leverage. This move directly addresses the cost disadvantage relative to major rivals; for instance, the World Bank notes that Vietnam and Bangladesh, which impose no such QCOs, have surpassed India in low-cost manufacturing, with global apparel market shares of 5.9% and 5.1% respectively, compared to India's 3.5% (2022 data).
Diversification and Value-Added exports
Industry leaders are using this cost reduction to accelerate the national goal of achieving $100 billion in textile exports by 2030, pivoting toward high-growth, value-added products. A key growth strategy involves doubling down on technical textiles (e.g., functional sportswear, industrial fabrics) and prioritizing markets with favorable trade agreements, such as the EU and UK, which offer significant demand potential. Historically, a dominant player like Arvind Limited has exemplified this pivot, moving from basic fabrics to integrated, high-tech textiles and branded apparel, demonstrating the necessary model shift. This renewed cost efficiency allows firms to invest in technology and faster design cycles, crucial elements needed to overcome the structural issues of small-scale operations that currently impede India's broader global market penetration.
Vietnam's fashion and apparel sector is navigating a pivotal, challenging shift, where the EU-Vietnam Free Trade Agreement (EVFTA) is now less about initial tariff cuts and more about driving a "green transition." Exports to the EU surged, reaching over $3.5 billion in the first 10 months of 2024, up 10.61% year-on-year, propelled by zero-tariff roadmaps. However, the true game-changer is the EU’s upcoming Sustainable and Circular Textile Strategy, demanding product transparency, durability, and recyclability by 2030.
The 'Fabric-Forward' rule and investment
The EVFTA's "fabric-forward" Rule of Origin (RoO), requiring fabric to be sourced from Vietnam, the EU, or partner countries like South Korea—remains a constraint, as Vietnam still imports substantial raw materials. This mandate is now fueling a critical need for upstream investment in local spinning and weaving, especially for eco-friendly materials. Manufacturers like May 10 Corporation, a historical national brand with an annual revenue of nearly $195 million in 2024, are responding by integrating digital transformation and green initiatives, targeting a 15,000–20,000 tonne annual CO₂ reduction.
Risk and opportunity in Green compliance
The most news-worthy angle is the pressure to adapt. The EU's demand for a Digital Product Passport and Extended Producer Responsibility (EPR) from 2026 means Vietnamese firms must invest in sustainability or risk market exclusion. This is a crucial opportunity: companies that pioneer circularity, adopt technologies like Cold-Pad-Batch (CPB) dyeing to cut emissions, and meet strict green standards will not only secure long-term EU contracts but also solidify a competitive edge over rivals without similar FTA access. The sector's financial outlook remains buoyant, targeting $47–48 billion in exports for 2025, but sustainable compliance is the non-negotiable price of admission.
The global textile supply chain is pivoting rapidly, driven by surging demand for US Upland cotton, the primary fiber for mass-market apparel. The latest USDA report reveals a dramatic jump in Upland cotton export sales, climbing to 199,000 running bales, more than doubling the prior week's figures. This rebound underscores a robust and urgent appetite from Asian textile hubs, led by Vietnam, Turkiye, India, and Bangladesh who are restocking to fuel the fast-fashion engine.
Asian mills outpace premium fibre market
This vigorous Upland buying spree, essential for everything from basic tees to denim, starkly contrasts with a slight dip in sales of its luxury counterpart, Pima cotton. Pima sales fell 4% to 8,200 bales, a premium fiber branded as Supima and favored by high-end brands like Michael Stars for its strength and softness. The financial outlook for cotton remains volatile, with ICE futures supported by the sheer volume of Upland sales but cautioned by broader economic uncertainty.
The trade policy jigsaw
The shift is further complicated by geopolitics. The primary buyers; Vietnam, India, and Bangladesh are strategic sourcing destinations for Western retailers aiming to diversify away from China and mitigate the impact of recent US tariff hikes on other textile nations. This dynamic positions inexpensive and reliable US Upland cotton as a critical competitive advantage for these manufacturing hubs, enabling them to meet the high-volume, low-cost demands of global apparel giants. The market's current trajectory suggests a continued pressure on pricing and production speeds, with brands prioritizing cost-efficiency over luxury fiber sourcing in the immediate term.
In a policy reversal that has given some relief across India’s textile ecosystem, the Ministry of Textiles has officially rescinded the Quality Control Order (QCO) on Viscose Staple Fibre (VSF) with immediate effect. Published in The Gazette of India on November 18, 2025, the order reverses the earlier mandate that required mandatory Bureau of Indian Standards (BIS) certification for all imported VSF.
The government notification was unequivocal. Acting under its statutory powers, and after consultation with BIS the Ministry stated that it “hereby rescinds the notification… dated 29th December 2022… relating to Viscose Staple Fibres with immediate effect.” This reversal marks more than just the removal of a compliance requirement. It signals a recalibration of India’s raw material policy in favour of global integration, lowered costs, and higher export competitiveness, a thread that ties directly into the nation’s Vision 2030 of achieving $100 billion in textile exports.
A policy reversal that rebalances market power
When the QCO on VSF came into effect in April 2023, it reshaped the MMF value chain in a way few anticipated. With BIS approvals delayed for most overseas suppliers, VSF imports fell sharply, effectively leaving the domestic industry dependent on a single local producer. The rescission disrupts that monopoly and opens the gates to global suppliers, reintroducing choice, competition, and supply flexibility.
Analysts view the move as part of a broader correction, coming on the heels of similar rollbacks on polyester intermediates reflecting the government’s evolving understanding that supply-side restrictions, however well-intentioned, can undermine cost competitiveness in export-led industries.
How VSF’s return to open markets alters MMF economics
Price Realignment: This is a correction long overdue. Before the rescission, domestic VSF commanded a 10-12 per cent premium over comparable grades from China, Indonesia, and Thailand. With imports now open, this price wedge will narrow quickly.
Table: Price dynamics before and after rescission
|
Metric |
Pre-rescission |
Post-rescission outlook |
What it means |
|
VSF Price Gap |
10-12% higher than imports |
Prices expected to converge toward global average |
Indian spinners gain breathing room—critical for yarn costs and export competitiveness |
|
Domestic Monopoly Pricing |
Supported by import restrictions |
Competition from multiple global suppliers |
Reduces raw material inflation and improves blending economics |
|
Impact on PSF |
VSF premium kept PSF more competitive |
Lower VSF prices will pressure PSF and P-V blends to adjust |
Entire MMF basket becomes more globally aligned |
The rescission of import restrictions marks a significant shift from a protected, high-cost domestic market to a competitive, globally aligned one.
• Cost relief: The elimination of the 10-12 per cent price premium on Viscose Staple Fibre (VSF) allows domestic prices to align with global averages, directly lowering raw material costs for Indian spinners.
• Market correction: The move effectively dismantles domestic monopoly pricing by introducing competition from international suppliers. This is expected to curb raw material inflation and make blended textiles (like Polyester-Viscose) more economically viable.
• Broader alignment: The price drop in VSF will likely force a price correction in Polyester Staple Fibre (PSF) and other substitutes to maintain competitiveness, resulting in a more efficient and globally competitive Man-Made Fibre (MMF) sector overall.
Demand revival as blends take centre stage again
Globally, MMF accounts for nearly 75 per cent of total fibre consumption, and India’s long-term growth strategy hinges on capturing a larger share of this market. VSF plays a crucial role in textile categories that demand breathability, drape, and comfort, qualities prized in womenswear, knits, home textiles, and fashion-forward products. With lower VSF prices spinners can revive dormant poly-viscose lines Mills can optimize blending ratios with cotton during volatile cotton price cycles. Exporters can re-enter markets where price competition from Bangladesh and Vietnam had grown fierce. This is particularly relevant for knitwear hubs like Tiruppur, Ludhiana, Kolkata et al and suiting clusters like Bhilwara, where VSF-based blends form the backbone of seasonal and value-added product lines.
Supply chain relief after a period of artificial constriction
One of the most significant benefits of the rollback is the restoration of an uninterrupted supply chain. During QCO enforcement imports from China, Indonesia, and Thailand were restricted; BIS approvals remained stuck in long bureaucratic cycles; import volumes crashed by 65 per cent within a year; spinners were forced to rely on a single domestic supplier and raw material inflation eroded export margins.
Table: Import and supply chain impact of the QCO
|
Metric |
Pre-rescission impact (VSF) |
Policy implication |
|
VSF Imports Decline |
Plummeted by 65% in less than a year after QCO enforcement (April 2023 onwards) |
Imports expected to surge as spinners secure raw material at competitive global rates |
|
Domestic Price Premium (VSF) |
10% - 12% over international prices |
Narrowing of the price gap, crucial for the cost structure of spinners and weavers |
|
VSF Import Sources Restricted |
Imports from key sources like China, Indonesia, and Thailand were restricted due to BIS licensing delays |
Wider access to foreign suppliers will enhance India's global competitiveness in MMF apparel |
The rescission rectifies significant supply side distortions that had previously hampered the industry. In fact, moving from a single domestic supplier to a diversified global base reduces the industry's vulnerability to domestic price shocks and supply constraints. The sharp drop in imports (65 per cent) had inflated costs, making Indian exports uncompetitive compared to rivals like Bangladesh and Vietnam. The policy reversal is expected to restore cost parity. And reinstating full access to Advance Authorization allows exporters to engage in long-term planning and pricing, which was previously difficult due to regulatory uncertainty and insufficient exemptions.
A lifeline for Indian exporters battling global rivals
Countries like Bangladesh, Vietnam, and Indonesia, India’s fiercest competitors in MMF-based apparel have long benefited from unrestricted access to low-cost VSF and polyester. The QCO-imposed cost premium acted as a penalty on Indian exporters, making it harder for them to compete in categories such as fashion knits, blended suiting, athleisure, viscose-rich womenswear and home textiles. With raw material costs now expected to normalize, India can reclaim lost competitive ground, especially in large global markets like the EU, Middle East, and the US.
What’s more, the timing is critical. Global buyers are actively diversifying sourcing away from China, and India is positioning itself as the world’s China+1 alternative. The rollback helps India enter this race with fewer handicaps.
No wonder, across associations spinners, weavers, powerloom clusters, garment exporters the reaction has been uniformly positive. The Ministry of Textiles stated that the move will “ensure seamless access to quality raw material, enhance global competitiveness, and drive industry-led growth.”
Industry bodies have labelled it as path-breaking, structural step forward and essential for India’s Vision 2030 targets. The common sentiment is that the rollback realigns India’s policy framework with market realities.
What this means for the Vision 2030 ambition
India aims to scale the textile sector from $160 billion today to $350 billion by 2030, including $100 billion in exports. To get there, two fundamentals are non-negotiable first is raw material security and second international price parity. The rescission of the VSF QCO checks both boxes as it reopens access to competitively priced global fibres and restores the momentum for MMF-based product diversification. It also strengthens India’s case as a reliable global sourcing partner while encouraging new investments in spinning, weaving, and fibre innovation. What’s most important is that manufacturing costs for MSMEs, the backbone of the textile chain also reduces with this move. And as the world shifts toward high-performance fabrics, technical textiles, and MMF-rich garments, India’s policy now aligns with the trajectory the global market is already on.
