Indian yarn exports on the rise in 2024, Bangladesh and China lead the charge.

The Indian yarn export market has witnessed a significant turnaround in the last six months (January-June 2024), driven by a surge in demand from key destinations like Bangladesh and China. Industry reports indicate an overall growth of about 83 per cent in cotton yarn exports compared to the same period in the previous fiscal year (FY23).

Data-driven growth

Cotton yarn exports rose by an impressive 83 per cent in FY 24 compared to the previous year. Notably, China's share of Indian yarn imports has more than doubled in FY 24, reaching 21 per cent from just 10 per cent in FY 23. This is attributed to concerns about forced labor in China's Xinjiang cotton production, leading global apparel brands to seek alternative sources.

Table: Top export destinations (Jan-June 2024)

While Bangladesh continues to be the largest importer of Indian yarn by value, China has made a surprising comeback. Bangladesh maintained its position as the top importer, accounting for roughly 28 per cent of India's total cotton yarn exports. Stable demand from Bangladesh's garment industry continues to fuel this growth. As per ICRA a 25 per cent decrease in cotton fiber prices compared to FY 23 makes Indian yarn more competitive.

China after a decline in FY23, saw its share of Indian yarn imports more than double in FY24, reaching 21 per cent. This resurgence is attributed to concerns over forced labor in China's Xinjiang cotton production, leading global apparel brands to seek alternative sources like India.

So what are the factors driving growth. One major factor is shifting geopolitical landscape as concerns regarding Xinjiang cotton have opened doors for Indian yarn in the Chinese market which saw its share more than double in FY24 compared to FY23. Favorable cotton prices is another positive. Domestic cotton fiber prices in India witnessed a decline of 25 per cent in FY24 compared to FY23, making Indian yarn a more competitive option for international buyers.

India is actively seeking to diversify its yarn export market beyond the traditional heavyweights of Bangladesh and China. Countries like Vietnam, Turkey, Russia, South Korea and Central American nations hold significant potential for increased yarn imports from India.

While the future outlook of Indian yarn export looks positive. ICRA predicts a continuation of the upward trend in FY24 with exports reaching 85-90 per cent higher than FY23. However, some uncertainties cloud the horizon. Stable cotton prices are crucial for sustained growth. While a decline in cotton prices in H2 FY23 aided exports, a potential drop in cotton production due to uneven rainfall in 2024 could impact price stability. Also a slowdown in the global economy could dampen demand for apparel and ultimately yarn.