Cotton price fluctuations threaten spinning and weaving industry.

The Indian spinning and weaving industry faces a double-edged sword with current low cotton prices. While these benefit farmers with higher exports, domestic mills stand to lose due to potential scarcity and rising cotton costs in the coming months. Saurin Parikh, head of Gujarat's Spinners Association, warns that increased cotton exports, spurred by lower prices, could lead to diminished availability for domestic mills, forcing them to further cut production. This dilemma stems from a combination of factors. The first and foremost is global market challenges. Weakening demand for fabrics and garments, coupled with limited yarn demand from major players like China and Bangladesh, puts upward pressure on cotton prices. The issue of domestic regulations is another factor as stricter payment rules for small businesses (MSMEs) within 45 days are making textile companies cautious while accepting orders, further impacting production. The Cotton Association of India (CAI) and other industry players are holding limited amounts of cotton, suggesting a tight balance sheet. This could lead to even greater difficulty for spinning units in securing the raw materials they need, adding to their existing challenges. Despite a recent hike in yarn prices, profitability remains uncertain. As cotton prices have already begun fluctuating, reaching almost Rs 58,000 per candy, the industry faces an uphill battle. Balkrishan Sharma, a leading textile player, highlights the need for a global demand surge to absorb the cotton price changes due to higher exports and ensure optimal mill functionality. While various domestic and international challenges cloud the industry's future, Sharma believes the worst might be over. He finds hope in positive indicators from the US market, a key driver for the Indian cotton industry. With rising inflation and growing real wages in the West, Sharma anticipates a potential industry improvement from June onwards, albeit with concerns looming from the deteriorating European market. In essence, while the current situation presents challenges for domestic spinning and weaving, there's cautious optimism for a potential industry rebound in the latter half of the year.