Indian Cotton Spinning Industry Expects Surge In Demand Despite Challenges

New Delhi, Jan 31 (KNN) The domestic cotton spinning industry in India is poised for growth, with a projected 12-14 per cent increase in demand in volume terms for the fiscal year 2024, according to a report by the rating agency ICRA.

The surge is attributed to a notable shift in sourcing preference away from China and anticipated improvements in demand for the spring/summer season in the US and EU regions.

Yarn exports are also anticipated to witness a substantial 85-90 per cent rise, fuelled by the changing sourcing dynamics and increased demand from apparel and home textile manufacturers.

However, the industry is not without its challenges, as a sharp drop in cotton prices is expected to lead to an 8-9 per cent year-on-year decline in revenues, totalling Rs 33,465 crore in FY2024.

Despite the increase in cotton yarn volumes, ICRA predicts a 9-10 per cent decline in the operating income of Indian cotton spinning companies, coupled with a 200-240 basis points reduction in operating margins.

Senior Vice President at ICRA, Jayanta Roy, mentioned that the addition of in-house power generation capacities by select players may alleviate margin pressures in the medium term.

The report highlights a trend reversal in cotton yarn exports.

After witnessing a 53 per cent decline in FY2023, there has been a notable turnaround in the current fiscal year.

In the first seven months of FY2024, overall yarn export volumes grew by 142 per cent on a year-on-year basis, with increased exports to China.

ICRA estimates India's yarn exports to surge by 85-90 per cent for the full fiscal year, with Bangladesh, China, and Vietnam accounting for 60 per cent of these exports.

Despite concerns related to the ongoing Red Sea conflict, which has the potential to impact apparel export volumes, the immediate effect on Indian yarn exports is expected to be minimal.

However, a sustained continuation of the conflict could lead to repercussions on both domestic and export demand for cotton yarn and its realisations.

(KNN Bureau)