The yarn sector, affected by high cotton prices in the past six months, might become normal within a fortnight. Demand for yarn in markets like Bhiwandi, Ichalkaranji and Kolkata has picked up with the requirement for fabric going up in view of the festival season. In addition, the unsold yarn stock with spinning mills is also low now. Because of the stable and lower cotton prices, India would have a competitive advantage in the international market also.
India is likely to get a record crop with a 15 per cent increase in area and a favorable monsoon and weather. Cotton prices would also be comparatively lower throughout the season and therefore the domestic demand is expected to pick up.
The Indian textile and clothing industry had been passing through continuous recession during the last three years mainly due to poor offtake in the global market. Competing nations like Vietnam and Bangladesh have competitive advantages through free trade agreements and preferential trade agreements. In addition high tariff rates have been imposed on Indian textile and clothing products in the the European Union, the US, Canada and China. The global cotton position is expected to be very comfortable during 2017-18 due to an increase in area under cultivation by around 11 per cent.