Cotton yarn exports from India fell 22 per cent in the first quarter. Global cotton yarn demand is under stress as GDP growth in China has fallen and there are recessionary trends in major cotton markets including Bangladesh. The slide in exports of cotton yarn is worsened by low margins in the Indian cotton market due to higher domestic prices. Indian cotton yarn manufacturers are losing due to China’s grant of duty-free access to Pakistan and Vietnam.

India is the world’s largest exporter of cotton yarn and has major markets in China, Bangladesh, Pakistan, Vietnam and South Korea. Yarn exports to China account for a third of total yarn exports from India. Exports to Vietnam increased by 72 per cent in the last year. This year, yarn exports to China, Bangladesh, Pakistan and the European markets are down. Millers who are turning to the domestic market are feeling the heat due to a spike in duty-free garment imports from Bangladesh. Imports of garments from Bangladesh have jumped 82 per cent, much of it made from duty-free fabrics coming from China.

Cotton spinning mills in India are resorting to partial shutdown as a squeeze in demand from China and Bangladesh has resulted in accumulated yarn stocks.