India’s cotton yarn industry is poised to clock 7-9 per cent revenue growth in fiscal 2026, up from 2-4 per cent in the previous year, backed by a rebound in exports especially to China and steady domestic demand. This growth will be volume-led, supported by a modest rise in yarn prices.

Operating margins are projected to improve by 50-100 basis points this fiscal, following a recovery last year, thanks to stable cotton yarn spreads and enhanced domestic cotton availability from the Cotton Corporation of India (CCI).

An analysis of 70 major spinners, contributing 35-40 per cent of the industry’s revenue, indicates that export recovery will be the key driver. Cotton yarn exports, which make up around 30 per cent of revenue, are expected to grow 9-11 per cent, reversing last year’s 5-7 per cent decline. China, which accounts for 14 per cent of yarn exports, is resuming imports as its domestic cotton production normalises.

According to Crisil Ratings, spinners will benefit from India's stable cotton production and regain market share in China. Additionally, India’s textile exports to the US remain competitive due to higher tariffs on Chinese goods, supporting 6-8 per cent growth in downstream sectors like home textiles and garments.

CCI’s extensive procurement in the current cotton season will ensure supply stability, reduce inventory losses, and further support profitability. Capital expenditure will stay moderate, containing debt levels. With better margins and efficient working capital use, interest coverage is set to rise to 4.5-5 times, while gearing remains stable at around 0.55-0.6 times.

However, changes in global tariffs, inflation, or a demand slowdown in the US could impact this positive outlook.