China's Yarn Hunger Drives India's Cotton Consumption to Record Highs

India has rapidly consolidated its position as a leading cotton yarn supplier to China, with exports to that market tripling over the first ten months of the current marketing year, according to the United States Department of Agriculture's latest world market and trade report. India's share of China's total yarn import market climbed sharply from 7 per cent to 21 per cent in the process.

The USDA attributes the surge to a combination of a depreciating rupee and falling yarn prices that made Indian yarn exceptionally competitive even as China's overall yarn import volumes grew. Overall, India's cotton yarn shipments to all destinations rose 8 per cent during the same period, though a reduction in exports to Bangladesh partially tempered the headline growth.

Sharad Khemka, Managing Director of S.P. Yarns in Kolkata, confirmed the trend on the ground. "Yarn production is not viable in China due to higher prices," he noted, explaining why Chinese buyers have turned to Indian suppliers in large volumes this year.

Not all yarn counts are benefiting equally. Chinese buyers have concentrated their purchases on coarser yarn counts — specifically 16s and 21s — which are thicker threads used in heavy-duty home textiles and knitted fabrics, according to Khemka.

India has effectively stepped into a gap left by Pakistan, which was previously a significant supplier of coarse-count yarn to China. Vietnam remains a competitor, but Indian exporters have established themselves as the dominant player in this segment.

Dhiraj Khetan of Sri Salasar Balaji Agrotech in Hyderabad, a spinner and exporter, added that Chinese buyers are actively preferring yarn over raw cotton imports because processed yarn works out cheaper for them at current price levels. Khetan noted that yarn exports have also grown to Bangladesh this year, offering Indian spinners a degree of market diversification even as Bangladesh's overall yarn import share from India dipped.

The USDA has forecast India's cotton consumption at a record 26.5 million bales (of 480 pounds each) in 2026-27, up from 26.0 million bales in 2025-26. The previous record of 26 million bales was set in 2020-21 during the post-Covid rebound.

A significant driver is government policy. India removed import duties on all cotton for more than six months in 2025-26 and extended the exemption through the first three months of 2026-27 to support the domestic textile industry. Complementing this, the USDA has forecast record cotton imports of 4.8 million bales in 2025-26, with imports easing to 3.0 million bales in 2026-27 as domestic supply conditions evolve.

The duty relief has made imported raw cotton more accessible to spinners, lowering input costs and enabling mills to price yarn competitively on international markets — a chain of effects now visibly playing out in India's export data.

While the export momentum is strong, the domestic cotton price environment has seen some turbulence. Prices had been on an uptrend in recent sessions before easing around 2 per cent on the ICE market on Thursday, which fed through to lower domestic quotes.

Ramanuj Das Boob, a sourcing agent in Raichur, said resellers and MNCs have already responded by trimming offers. "The market is easy as resellers and MNCs are active and have reduced the prices by around ₹500 per candy (356 kg)," he said, adding that overall demand may ease further as market participants anticipate new-crop arrivals.

For spinners, the recent run-up in cotton prices had already begun to pose a challenge to export competitiveness. Khemka of S.P. Yarns flagged this directly, noting that while Chinese buying remains active, the higher domestic cotton prices have introduced fresh uncertainty for margins.

India's surge fits within a broadly constructive global cotton outlook. The USDA forecasts global production at 117.6 million bales for the current season — up nearly 400,000 bales — driven by larger crops in Brazil, Greece, and Türkiye, which more than offset a smaller United States harvest.

On the demand side, global consumption is projected to rise by nearly 1.0 million bales to reach 122.9 million bales, a six-year high. China, India, Indonesia, and Vietnam are the key engines of demand growth, partially offset by lower consumption in Bangladesh and Egypt.

The persistent gap between global production and consumption underscores the tightness in world cotton markets and helps explain why Indian yarn — priced attractively thanks to the rupee's depreciation and import duty relief — has found such a receptive audience in China. For Indian cotton stakeholders, the global supply-demand dynamic remains broadly supportive for now.