India’s cotton yarn industry may grow at 9 percent in FY 2025-26: Report

New Delhi: India’s domestic cotton yarn industry may grow at a rate of 7-9 per cent in the current financial year due to revival in exports and strong domestic demand. This is higher than the growth rate of 2-4 per cent in the previous financial year. This information was given in the Crisil report.
The report said that the increase in volume is due to a slight increase in yarn prices. After the improvement in the last financial year, the operating margin is expected to increase further by 50-100 basis points this financial year, due to better availability of cotton through the Cotton Corporation of India (CCI).

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This report is based on the analysis of 70 cotton yarn spinners. These spinners account for 35-40 percent of the total income of the industry. The main reason for the increase in income in FY 2026 will be the jump in yarn exports to China. Exports contribute to around 30 per cent of the industry’s revenue, of which China contributes 14 per cent. Yarn exports from India to China declined in FY25 due to higher cotton production in China. As a result, India’s total cotton yarn exports declined by 5-7 per cent.

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The report said that this situation is likely to reverse in the current financial year, as China yarn exports may grow by 9-11 per cent. Gautam Shahi, director, Crisil Ratings, said that this is likely to benefit Indian spinners as they will benefit from stable domestic cotton production in the current cotton season and regain their market share. According to the report, CCI’s procurement in 2025 cotton season will ensure stable cotton availability and reduce inventory losses and increase spinners’ profits by 50-100 bps this fiscal followed by a recovery of 100-150 bps in FY2025.