Indian cotton yarn demand spins up in FY24, Q1 FY25 poised for growth.

India's cotton yarn industry is showing signs of revival, with domestic demand expected to grow by 12-14 per cent in volume terms during the current fiscal year (FY24). This positive outlook comes courtesy of a report by ICRA, a rating agency.

The growth is attributed to several factors, like shifting global preferences. Countries like the US and EU are expected to see a rise in demand for spring/summer clothing, driving yarn purchases from Indian manufacturers. Additionally, a move away from China as a sourcing hub is creating opportunities for Indian exports. Export volumes are predicted to increase by a staggering 85-90 per cent in FY24.

Moreover, the apparel and home textile sectors within India are expected to see a rise in demand, which will in turn boost yarn consumption. Also, there has been a significant drop in cotton prices that has led to cheaper yarn, potentially stimulating sales volume.

While higher demand is good news, a sharp decline in cotton prices has squeezed profit margins for yarn spinners. This, coupled with sluggish domestic demand in certain garment segments like knitted and denim, might cast a shadow on Q1 performance. Experts caution that the first quarter (Q1) of the next fiscal year (FY25) might see a slower pace initially. The slowdown is likely due to macroeconomic headwinds, but analysts predict a pick-up later in the quarter, leading to overall growth for FY25. Despite potential short-term fluctuations, the Indian cotton yarn industry appears to be on an upward trajectory, driven by a combination of global and domestic factors.