India's textile imports see sharp rise, driven by soaring cotton demand

India's textile imports have shown a marked increase, particularly in raw cotton, according to the latest data from CITI. The analysis of import and export data for December 2024 reveals a dramatic surge in cotton imports, significantly impacting the overall import landscape of the sector.

Raw cotton imports skyrocket

The most significant change is the extraordinary 384.87% increase in raw cotton and waste imports in December 2024 compared to December 2023. Imports jumped from $29.47 million to $142.89 million. This massive increase strongly indicates a growing reliance on imported cotton by the Indian textile industry.

Table: Import of cotton, yarn, fabric and made-ups

Looking at the cumulative figures for the period of April to December 2024, the trend remains pronounced. Cotton imports reached $918.69 million, an 84.18 per cent increase compared to the $498.81 million imported during the same period in 2023. This year-to-date growth further emphasizes the significant shift in India's cotton sourcing strategy.

While imports of textile yarn, fabric, and made-ups also experienced growth, the increase was more moderate. These imports rose by 9.69 per cent in December 2024 compared to December 2023, and by 3.27 per cent for the April-December 2024 period. This suggests that the primary driver of the overall import surge is the heightened demand for raw cotton.

Reasons for the rise in imports

The table clearly shows the disproportionate growth in raw cotton imports compared to other textile imports. The nearly four-fold increase in December and the substantial year-to-date growth point to a significant change in the industry's raw material sourcing.

Possible factors could be first, domestic production shortfalls. If India's domestic cotton production couldn't meet the industry's demand, imports would naturally increase. Global price competitiveness could be another reason. If global cotton prices were more favorable than domestic prices, it would incentivize imports. Increased demand for specific cotton types as the Indian textile industry might require specific types of cotton (e.g., long-staple cotton) that are not readily available domestically. And changes in import duties or trade agreements could also influence import volumes.

Implications for the Indian textile industry

This rise in import increases the industry's dependence on global markets, making it more vulnerable to international price fluctuations and supply chain disruptions. Also, increased imports could put downward pressure on domestic cotton prices, negatively affecting farmers' incomes. And higher import volumes could contribute to a widening trade deficit in the textile sector.

Therefore, the rise in cotton imports is a crucial development for the Indian textile industry. This CITI data highlights the need for strategies that support domestic cotton production while ensuring the competitiveness of the Indian textile industry in the global market.