Spinning mills face margin squeezes as South Indian textile demand cools

The South India textile sector is facing challenges as subdued demand forces local spinning mills to reconsider pricing strategies for cotton yarn and fabric inventories. As manufacturers tried to pass along higher raw material costs, sluggish retail uptake and cautious procurement cycles among garment makers, market transactions remained constrained.

Stakeholders say, apparel manufacturers are resisting cost increase due to tight liquidity constraints and lower margins in finished retail merchandise.

Consequently, trading hubs across Tiruppur and Coimbatore are dealing with stagnant movement in yarn counts, compelling several independent spinning units to operate below peak capacity to prevent inventory accumulation. Sector analysts say while export commitments offer a marginal cushion for large-scale operations, domestic-focused spinning mills remain vulnerable to prolonged demand contractions. Trade associations emphasize that aligning production schedules with realistic market absorption rates will be critical to stabilizing wholesale fibre and yarn valuations through the upcoming fiscal quarters.