Global spinning industry witnessing a change with Vietnam and India taking the lead

The spinning industry, a crucial cog in the global textile supply chain, is currently going through a complex market situation with shifting demand patterns, fluctuating raw material prices, and evolving technological advancements. While the short-to-mid-term outlook remains cautiously optimistic with a projected recovery, the mid-to-long-term horizon presents both challenges and opportunities for growth and expansion.

Shifting in the market

The global spinning capacity is undergoing dynamic shifts, with countries across Asia, particularly China, India, and Vietnam, continuing to dominate. These countries have witnessed a substantial increase in spindlage capacity, driven by robust domestic demand, supportive government policies, and competitive labor costs.

Table:  Spindalge and capacity share

Source: International Textile Manufacturers Federation (ITMF)

The table clearly highlights Asia has an edge in spindlage with China taking the lead with 38 per cent share followed by India at 17 per cent and Pakistan at 4 per cent.

Over the next few years, several countries are expected to witness significant growth in spinning capacity, with various factors working in tandem. For example, India, already a major player, is poised for further growth with increasing domestic demand, government initiatives promoting textile manufacturing, and a focus on sustainable and innovative spinning technologies. Similarly, Vietnam's spinning industry is also set for robust growth, attracting investments due to its favorable business environment, skilled labor force, and strategic location for serving both regional and global markets.   Bangladesh, with its large apparel industry too, is expected to increase its spinning capacity to reduce its reliance on imported yarn and enhance its competitiveness in the global textile value chain.

India and Vietnam close competitors

While both India and Vietnam are experiencing substantial growth in their spinning industries, Vietnam is currently outpacing India in terms of growth rate. Vietnam's spinning capacity is projected to grow at a CAGR of 8-10 per cent over the next five years, driven by strong export demand and increasing foreign investment. India's spinning capacity is expected to grow at a CAGR of 5-7 per cent during the same period with rising domestic consumption and government initiatives.

Indeed Vietnam is witnessing faster growth. One major reason for this is Vietnam has secured several free trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), which provide preferential access to major markets. Moreover, labor costs are generally lower than India's, making it a more attractive destination for labor-intensive spinning operations. The Vietnamese government too has actively promoted the textile and apparel industry, offering incentives and streamlined regulations to attract foreign investment.

However, both countries face their share of challenges. For India, high logistics costs; fragmented industry structure; skill gaps in the workforce are a bane. However, a large and growing domestic market; availability of abundant raw material like cotton and government support for textile manufacturing goes a long way in boosting the sector’s growth.

Vietnam too faces challenges as it is dependent on imported raw materials. And increasing competition from other Southeast Asian countries is a threat. But what works for them is the favorable trade agreements; competitive labor costs and strong government support.

The bottomline is the global spinning industry is undergoing a change due to evolving market dynamics and technological advancements. While the short-to-mid-term outlook indicates a gradual recovery, the mid-to-long-term horizon has both challenges and opportunities for growth and expansion. Countries like India, Vietnam, and Bangladesh are expected to lead the charge, with their favorable economic conditions, government support, and a focus on sustainability.

As the industry continues to evolve, embracing innovation and sustainable practices will be crucial for spinning a successful and sustainable future. Both India and Vietnam have the potential to become major players globally, but they need to address their respective challenges and capitalize on their unique strengths to achieve sustainable growth.