The Indian cotton spinning industry is navigating a high-pressure environment as of late December 2025, with annual revenues projected to decline by 4 per cent–6 per cent. This downturn is largely the result of a ‘trickle-down effect’ from aggressive US trade policies, specifically the 50 per cent reciprocal tariffs on Indian-made garments. These levies have forced downstream apparel exporters to provide significant price concessions to maintain their presence in North American retail markets. Consequently, these costs are being absorbed across the value chain, causing cotton yarn realizations to slide from an average of Rs 103 per kg in H1,FY26 to approximately Rs 96–Rs 98 per kg this month. Market analysts at ICRA indicate, while domestic demand remains stable, the industry must prepare for a margin contraction of 50–100 basis points in H2,FY26.