There has been a 56.72 per cent fall in India’s cotton exports to China in 2014-15. As a result cotton prices in the domestic market are subdued. China’s stock levels have soared, spinners in China have been given fewer quotas and discouraged from direct imports. They are being encouraged to buy more domestic cotton and also from government agencies holding stocks.

In the meantime India is protecting its farmers by providing minimum support price. Domestic cotton demand is expected to rise about seven per cent this crop year. India is also looking for exports to various cotton deficient countries. Lower prices for Indian cotton may help boost shipments to these markets. India is the world's biggest producer and the second biggest seller of cotton. Demand from China used to account for 60 per cent of Indian cotton exports.

Yarn exports to China have also declined by 20 per cent due to a slowing in the textile industry there. Exporters have tried to compensate for this fall elsewhere, resulting in a slight rise in yarn shipments to Sri Lanka, Bangladesh and Vietnam during recent months. The fall in global demand, decline in commodity prices and dip in oil prices are impacting India’s overall exports. Falling for seven months in a row, India's exports in June dipped by 15.82 per cent.