India’s textile value chain faces profit crisis amid increasing raw material prices

The Indian textile and apparel sector is facing a period of acute margin decline as domestic cotton yarn prices reached a record Rs 300 per kg in early May 2026. A cumulative increase of Rs 41 over the last five months, this rise is due to a combination of reasons like high domestic Minimum Support Prices for long-staple cotton and growing demand from international markets like China and Bangladesh. While upstream spinning mills have adjusted prices to reflect input costs, MSME powerloom units in clusters such as Bhiwandi and Surat are struggling with a pricing disparity; fabric prices have only moved incrementally by Rs 10 to Rs 25 per m, leaving weavers unable to absorb the 15 per cent to 20 per cent spike in yarn costs.

The industry is now calling for a realignment of export policies. With textile exports reaching Rs 3.16 lakh crore in FY 2025-26, stakeholders are concerned that the current raw material volatility could result in a $4 billion loss in export revenue. To reduce this, the Powerloom Development and Export Promotion Council has advocated for a temporary removal of the 11 per cent import duty on raw cotton and a suspension of raw yarn exports to prioritize domestic value addition. Such measures are deemed essential to protect the livelihoods of approximately 6 million workers and ensuring that India remains competitive against regional rivals like Vietnam, which currently benefit from more stable duty-free access to raw materials.

The All India Industrial Micro-Weavers Association supports the development and technological upgradation of MSME weaving clusters. The organization focuses on cotton and blended fabric production for domestic and Middle Eastern markets. It aims to modernize 50,000 powerlooms by 2027 through the Hathkargha Samvardhan Sahayata scheme to enhance global competitiveness.