Cotton yarn export sees paradoxical growth as rupee falls to a record low

The Indian cotton yarn segment is experiencing a paradoxical growth in export competitiveness as the rupee’s fall to record lows against the US dollar provides a vital cushion for south Indian spinning mills. As of January 2026, the currency has breached the Rs 90 per dollar mark, effectively lowering the dollar-denominated price of Indian yarn for overseas buyers. This depreciation has allowed major hubs like Tiruppur to offset the impact of high domestic raw cotton prices and the 50 per cent US reciprocal tariffs that have otherwise dampened the broader apparel sector. Spinners are now redirecting inventory toward the export market to bypass sluggish domestic offtake, ensuring capacity utilization remains above 80 per cent.

Simultaneously, the Mumbai market has witnessed a firming of yarn prices by Rs 2-Rs 4 per kg as mills attempt to pass on the escalating costs of high-quality fiber. While domestic demand remains cautious due to a liquidity crunch, the onset of summer garment production and upcoming festival requirements for Ramadan and the wedding season are expected to tighten supply further. The falling rupee has enabled us to maintain a foothold in competitive global markets despite rising input costs, noted a leading Mumbai-based trade analyst. With the Cotton Corporation of India (CCI) maintaining a tight grip on high-grade stocks, spinning margins are increasingly dependent on currency-led gains and a shift toward high-count combed yarns for the export-oriented premium segment.

The South Indian spinning industry comprises thousands of MSME and large-scale mills producing high-quality cotton, blended, and synthetic yarns. It primarily serves the export markets of Europe and Southeast Asia while supplying the domestic hosiery cluster. Growth strategies emphasize sustainable fiber adoption and automation to mitigate rising labor and energy overheads.