Report reveals amidst the depreciation of rupee and rising global cotton inventories and expectation of bumper domestic crop, the Indian textile industry is expecting to gain on all fronts with competitive positioning in yarn, fabric and apparel exports. Global cotton production is expected to surpass consumption continuously for the fourth year in a row, which would result in further piling up of inventories. With the Chinese MSP for cotton at 142 cents/lbs, mill demand for cotton reduced significantly as the global prices hovered in the range of 80-90 cents/lbs. However, Chinese millers are not in favour of importing cotton as it attracts complex duty structure under quota imports. Quota free cotton imports attract 40 per cent duty; making imports unviable while yarn imports are not under the quota system.

“There has been a huge demand of Indian yarn from China. Pakistan and India have been the largest suppliers of Chinese yarn imports, providing 40 per cent and 20 per cent respectively, which could lead to price increase in India for domestic cotton in case there is a supply constraint. Moreover, as India is expecting bumper cotton crop owing to good monsoons, Indian spinners are believed to be at an advantageous position,'' the report said.

''We expect domestic cotton availability during the coming season in the range of Rs 100 per kg, similar to prices in current peak-season on higher expected inventory of 8.8 million bales compared to 8.3 million bales in the current season where stock/use ratio is expected to improve by 180bps to 29.8 per cent,'' it added.