The increase in yarn exports in FY24 saw the share of shipments to China rise from 10 per cent in FY23 to 21 per cent in FY24. Competitive prices of Indian cotton and the Xinjiang issue will help continue the momentum in exports in FY25 as well. Cotton yarn exports rose by 83 per cent in FY24.
The share of yarn exports rose 32 per cent of India's total production in FY24 against 19 per cent in FY2023. The growth mainly came from China which has been facing allegations of forced labour in the production of Xinjiang cotton. Share of exports to China rose to 21 per cent against 10 per cent in FY23.
Bangladesh, China, and Vietnam collectively account for 60 per cent of Indian cotton yarn exports. Further, domestic cotton fibre prices, after witnessing record-high levels in H1 FY2023, fell gradually in H2 FY2023. In FY2024, cotton fibre prices declined by 25 per cent in comparison to the average cotton prices in FY2023 amidst weak demand in the domestic market, as per ICRA.
Though the cotton fibre production for 2024 is estimated to fall by 6 per cent due to reduction in sown area amid uneven rainfall, carry-over surplus of cotton to support consumption in the year and this is expected to keep prices stable. No major impact was witnessed in cotton yarn exports due to the Red Sea conflicts as exports are mainly done to Bangladesh, China, and Vietnam. Sustained continuance of the conflict would, however, have a direct impact on apparel export volumes and a consequent impact on cotto.