Ludhiana wool industry in crisis as cheap Chinese imports erode domestic market share

The wool and hosiery industry in Ludhiana is reporting a ‘threadbare future’ as cheap Chinese yarn imports - ranging from yarn and fabric to finished accessories – continue to erode its domestic market share.

Kashmir has traditionally been the largest winter outlet for Ludhiana’s woolens. However, in the 2024–2025 season, business in the Kashmir valley plunged by almost 40 per cent as wholesalers shifted to Chinese garments.

Buyers are choosing Chinese-made winter wear because the fabric is lighter, softer, and perceived as more fashionable compared to traditional, heavier Ludhiana knits. Delhi markets have emerged as the primary entry point for Chinese woolens, which are then distributed to hilly regions, bypassing Ludhiana altogether.

Ludhiana manufacturers are caught between rising local costs and falling import prices. Local industry leaders state, Ludhiana production is at least 50 per cent behind China in terms of manufacturing efficiency. A sweater that costs Rs 1,000 to manufacture in Ludhiana is often available as a Chinese import for Rs 600–Rs 700.

Industry bodies like the Knitwear Club and Bahadurke Textile Association have raised alarms over unfair trade practices.  Importers are allegedly mislabeling Chinese polyester filament cloth (subject to 25 per cent duty) as cotton fabric (only 5 per cent duty).

Recent reforms in late 2025 (GST 2.0) saw a steep hike in taxes on woolen garments from 5 per cent to 18 per cent, which manufacturers claim has made winter essentials unaffordable for the middle class.

High power tariffs (including ‘cow cess’ and infrastructure tax in Punjab) make local production roughly 30 per cent more expensive than in competing Indian states like Haryana (Panipat) or international rivals like China.