Registration for cotton yarn exports from India has jumped 55 per cent in the first four months of the current fiscal due to a resurgence in Chinese demand. Export registration for cotton yarn almost doubled in April-July 2013 compared to April-July 2011. If the trend continues, cotton yarn exports would beat all previous expectations to set an all-time record this year. The Cotton Yarn Advisory Board has projected a 14.2 per cent increase in cotton yarn exports from India this financial year. But actual exports could be even higher.

Another factor which has helped exports is the record depreciation in the rupee against the dollar. Exporters have rushed to sign pact with importers at the current exchange rate. However, the substantial increase in exports has not affected domestic supply to mills. Domestic mills are operating smoothly with adequate capacity. 

The exponential growth in cotton yarn shipment has lowered the prospects of cotton exports as Chinese importers find purchase of fiber cost-effective. China has levied around 40 per cent accumulative import taxes and local levies to encourage the local power loom and textile sectors. In contrast, import duty on cotton yarn works out to about 8 per cent. Hence importing cotton does not make sense for Chinese textile mills.