Cotton accounts for 51 per cent of the total raw material cost in the Indian textile industry. This puts domestic industry margins under pressure. The cost of raw material inflation can’t be passed on due to subdued consumer demand. Meanwhile, yarn production has been fluctuating over the last six months, although the production average has been maintained. Exports have risen to more than 30 per cent during March 2019. Prices of cotton yarn are co-related to raw cotton prices and thus have seen an upward movement in line with raw cotton prices. Synthetic fabric has seen a gradual revival in demand due to decreased cost of production, which is a function of crude oil prices. Partially-oriented yarn and texturized yarn prices declined by eight per cent and seven per cent month on month.

India’s readymade garment exports have decreased. Removal of tax incentives for exports has made India’s textile goods less competitive vis-à-vis Vietnam and Bangladesh. Decreasing exports and weak consumer sentiments have impacted the industry’s capacity utilisation. But overall apparel production improved by 34 per cent for April 2019 and exports improved by 18 per cent for May 2019. Capital expenditure in textiles has been majorly to replace machines with new technologies and shift to premium/ niche products in the existing line-up.