Chinese economic slowdown is set to hurt Indian spinning industry the most in the textile value chain. China forms 40 per cent of the total cotton yarn exports from India, which is likely to come down, creating an oversupply situation in the domestic market. After yarn, Indian apparel exports are also likely to be impacted due to a depreciation of the yuan.

Already, till December, apparel exports had been growing at seven to eight per cent against the anticipated 13 to 15 per cent. Much of the fall in the export growth rate is attributed to a decline in Indian apparel exports to markets like China, Europe and the US due to the overall economic slowdown.

Garment and made-up exporters from India are expecting stiff competition in global markets if China continues its depreciation spree. Cheaper exports from China may render Indian exports uncompetitive in the existing markets. Owing to the slowdown in Europe, Indian realisations have already been hit by 10 to 15 per cent. The cost of production cannot be trimmed further.

Of the total $40 billion worth of textiles and clothing exports from India, apparel exports are worth $16 billion, while yarn, fabric and made-ups put together amount to $21 billion.