Thousands of Indian cotton spinning mills have shut shop in the past three months. The average realization from cotton yarn has fallen six per cent in the quarter between April 2019 and June 2019. The decline in average realisation has put a question mark on the survival of cotton spinning mills, with increasing fixed costs such as labor, interest on working capital, land, plant and machinery adding to their woes. Recovery in overall sentiment is not in sight resulting in closure of many small and medium size mills and rendering thousands of workers jobless.

One reason is the decline in exports following a weak global demand. A sharp and precipitous decline, especially in cotton yarn during the last four months, by about 35 per cent, has led to a crisis situation in the spinning industry. Cotton yarn exports to China declined by 50 per cent and Bangladesh by 38 per cent and Korea by 45 per cent.

In view of the sharp decline in exports, the spinning sector is in a very critical situation. Exports of cotton textiles continued their downward spiral, declining by 24.5 per cent during April to July. During the first three weeks of August, overall cotton textile exports declined by a staggering 25 per cent.