Indian cotton yarn exports are expected to bounce back in the fiscal year 2024, thanks to a surge in demand from Bangladesh and China. The recovery is fueled by Indian cotton yarn prices becoming highly competitive in the market. After experiencing a significant fall of 15 per cent in FY23 due to reduced demand from garment manufacturers, the cotton yarn industry is on a positive trajectory.
The turnaround can be attributed to a significant drop in domestic cotton fibre prices, which hit a record high during H1 FY2023 but steadily declined in H2 FY23. According to the ICRA, cotton fibre prices in 9M FY24 fell by 25 per cent compared to the average prices in FY23.
Production volumes have also seen a notable increase of 15 per cent in the first seven months of FY24, mainly due to the moderation in cotton fibre prices. Cotton spinners have ramped up their production volumes to cover their fixed overheads.
The boost in production and competitive pricing are expected to support yarn exports, particularly to China, Vietnam, and Bangladesh, which collectively account for 60 per cent of India’s cotton yarn exports. China’s share of yarn exports from India saw steady growth since January 2023, reaching 26 per cent in 7M FY24, up from 11 per cent in FY23.
Despite this, Bangladesh maintains its position as India’s top export destination, making up 31 per cent of the total in the first seven months of FY24, albeit a slight decrease from 37 per cent in FY23. With an increase in demand from these countries and a favourable market environment, Indian cotton yarn exports are projected to witness a strong recovery in FY2024.
