Rising labor costs is making China reduce cotton purchase and shift to value-added yarn from India, especially Gujarat. It’s no longer viable for China to import cotton and make yarn. Currently, Gujarat makes less than 5 per cent of yarn being produced in India. But in about four years, it is estimated to increase to over 20 per cent. In the last one-and-a-half years, yarn exports from India have already increased by 68 per cent. This has been mainly due to demand from China.

Because of the rising demand for yarn from China, over 100 new units are in the pipeline in Gujarat itself. Moreover, existing players are also upping their capacity. In the current cotton season, India is estimated to produce around 370 lakh bales out of which 28 per cent is from Gujarat. Till now, the largest cotton producing state, Gujarat was depending on southern states to spin cotton yarn. But now that may change to some extent.

For a long time, China was the hub of garment manufacturing and its goods were supplied across the world but China’s now culling at least some processes in the chain.