India’s cotton imports have jumped sharply. The high minimum support price is holding domestic prices at an elevated levels despite weak demand. With domestic prices remaining artificially higher than international prices, cotton imports may rise further.

Cotton yarn exports have fallen owing to low demand. Yarn exports fell 40 per cent month-on-month in July, largely due to an 80 per cent fall in demand from China which has entered into the second phase of the free trade agreement with Pakistan. The pact includes cotton yarn which directly competes with India.

India’s apparel exports are seeing a moderate recovery with the stabilising demand from the United States. The US-China trade war seems to have had no major impact as the apparel exported by China for July were 35 per cent higher than those in the previous month. India is yet to see the benefit in the trade war, as only a ten per cent m-o-m increase in exports was recorded in July. Exports to the EU market have been adversely affected by the preferred access to competing nations like Bangladesh and Vietnam. These could make it increasingly difficult for India’s apparel exporters to maintain their competitiveness in the EU.