Liquidity constraints and export hurdles stifle North Indian cotton yarn trade

The North Indian cotton yarn market has entered a phase of defensive stagnation as of March 4, 2026, with trading volumes hitting a seasonal low despite stable fiber availability. While the broader textile industry grapples with the fallout of the West Asia crisis, spinning hubs in Punjab and Haryana are witnessing a localized ‘wait-and-watch’ sentiment, driven by a 50 per cent reduction in RoDTEP export incentives. This policy shift has effectively raised the floor price for Indian yarn in the global market, making it significantly harder for mills to compete with cheaper Vietnamese and Pakistani alternatives.

Market participants report show, domestic weavers are operating on hand-to-mouth inventory levels, fearing a further correction in prices as the fiscal year-end approaches. The current nervousness is a direct result of tight credit cycles and the inability to pass on high production costs to the garmenting sector, notes a Ludhiana-based trader. Unlike the synthetic segment, which is battling energy-led inflation, the cotton sector is dealing with a demand-side vacuum.

With the national PLI scheme window set to close on March 31, many spinning units are reconsidering their expansion plans, prioritizing liquidity over capacity in an environment where export orders remain erratic and domestic consumption lacks the typical pre-festival momentum.

One of India’s largest vertically integrated textile conglomerates, Vardhman Textiles emphasizes sustainable manufacturing and digital supply chain integration in 2026 to boost long-term profitability. The company specializes in the production of high-quality cotton yarn, fabrics, and threads. It serves premium global fashion brands across the US, Europe, and Asia.