The US ban on textiles originating from the Xinjiang province of China has compounded the problems for India’s cotton yarn spinning industry, with half of the mills becoming idle in the past four to five months.
The Chinese yarn that can’t go to the US is now finding its way into the Indian market at cheaper rates, further reducing demand for expensive domestic Indian cotton yarn that has already been down. Indian cotton has been one of the cheapest in the world till September 2021, when Indian as well as global cotton prices started rising.
Atul Ganatra, president of the Cotton Association of India said about 50 percent of the spindles had become idle. “The entire spinning industry is depressed due to the unprecedented price fluctuations in cotton that we saw in 2021-22. Exports have fallen by 70 percent,” Ganatra said.
“We used to export 110-120 million kgs of yarn a month, which came down to 40-45 million kgs a month from June due to high cotton prices. Last month, we imported 4,000 containers of cotton yarn from China, which is around 80 million kgs,” said an executive of a textile company from North India.
Lalit Mahajan, senior vice president at Welspun India, said: “Most of the mills have either shut down their spindles or have gone for making substitute fibres like viscose, polyester, etc. Our (India’s) yarn exports in August fell to less than one-third of the normal monthly yarn exports. The export orders for Indian yarn, textile, garments, etc., are very low, while the Indian domestic cotton and yarn prices are still higher by 23% than the New York futures prices,” he said.
The industry executive from North India said: “If the cheaper Chinese yarn is coming to India, it is going to be a big problem for Indian spinners. Chinese cotton and yarn have always been costlier by 10-25 percent than Indian cotton. Normally, no import of cotton yarn used to take place from China.”
Indian yarn exported to China and Bangladesh gets converted into fabric and garments and then gets exported to Europe and the US. A fall in garment imports by Europe and the US due to recessionary pressures, in turn, has already cut the demand for Indian yarn from China and Bangladesh. The impact due to the US ban on fabrics from Xinjiang has added to that.
