Yuan devaluation has sharpened the competitive advantage of Chinese products. This is worrying Indian manufacturers who import polyester yarn as a textile raw material from China. India imports a portion of its requirement from China and South Asian nations such as Malaysia and Indonesia. With currency devaluation, fears of dumping have now surfaced.

China on August 11 took monetary policy measures that resulted in its currency losing strength by about two per cent and more on consecutive days, triggering a rout in the global stock markets and improving prospects of Chinese goods in the global market, including India. The Indian market for polyester yarn hovers in the range of 1.8 billion kg, with a value of approximately Rs 2.16 lakh crores. The country’s largest yarn markets are in Ludhiana, Punjab, and Malegaon in Maharashtra. The Chinese yuan devaluation is meant to boost sagging exports.

Chinese polyester yarn is now increasingly made from recycling poly-ethylene terephtha (PET) bottles. A large portion of Chinese knitters and weavers has adopted recycling PET bottles. With more efficiency refinements, the quality of PET bottle yarn is slowly beginning to compare favorably with India’s virgin yarn produce.