Cotton yarn prices remain stable as industry prioritizes Diwali deliveries

Cotton yarn prices in South India including Mumbai and Tiruppur remains stable as the textile industry prioritized production and deliveries in the lead-up to the Diwali festival. The current market sentiment is cautious but could become more positive if the US reverses its decision to impose a steep 50 per cent tariff on Indian textiles.

The US implemented the two-tiered tariff, which included a 25 per cent penalty for India's continued purchase of Russian crude oil, in late August. This has made Indian textiles far less competitive compared to those from countries like Bangladesh, Vietnam, and Pakistan, which face much lower duties. Industry experts report that export orders, particularly for home textiles and apparel, have either been canceled or stalled, with some businesses asking exporters to absorb a portion of the duty. This has caused a decline in exports and is a significant concern for the industry, which is heavily reliant on the US market.

While the overall textile industry is grappling with these challenges, Mumbai's cotton yarn market saw a slight increase in prices with a few export inquiries. In contrast, cotton prices in Gujarat reduced due to weak demand from domestic buyers. Industry leaders and analysts are hopeful that demand and payment flows will improve significantly after the Diwali holidays, which are a period of heightened consumer spending and business activity in India.

Meanwhile the government has taken some measures to reduce the tariff's impact, such as extending the duty-free import of cotton to lower raw material costs for mills. However, the industry is banking on ongoing trade discussions between India and the US to resolve the tariff issue and restore competitiveness in its largest export market.