The cotton industry will see a revival in fiscal 2024

After a lackluster year, the cotton industry is eagerly anticipating a rebound and expects sales to grow 5-7% year-on-year. Industry observers claim the optimism is due to factors such as Indian cotton prices aligning with international prices, a shift in demand from competing countries and a gradual recovery in demand from China.

Expectations of a good festival season for domestic retailers and a rebound in global demand from downstream industries should also boost India’s cotton industry as it tries to recover from poor F23 performance.

Commenting on the expected performance of the industry in the coming months, Ashwin Thakkar, Vice-President of the Textile Association of India said, “The industry is slowly coming out of trouble and the coming months will be better for the cotton industry. People have spent a lot on travel and personal care and this festival season is expected to see strong demand in textile sector, especially retail could see very strong demand.”

He said, “Global demand for Indian products may not change much in the short term as we see no end to the Ukraine-Russia conflict affecting demand in the European and American markets, which are our main export destinations.” But South Asian countries are doing well and may change demand patterns in the second half of the year.”

According to a CareEdge report, India’s cotton yarn industry is expected to see revenue growth of 5-7% while operating margin is expected to increase by 100-150 basis points in FY24 compared to FY23. Last year cotton production in India fell from 35.2 million bales in the 2020-21 cotton season (CS) to 31.1 million bales in the 2021-22 season. The lower cotton production led to a sharp increase in cotton prices. The average domestic cotton price peaked at around 1 lakh per candy (280/kg) in FY23. The mismatch between domestic and international prices had a significant impact on cotton exports and India recorded its lowest cotton yarn exports in a decade. In FY23, India’s cotton yarn exports totaled 664,000 tons, compared to the decade’s highest exports of 1,389,000 tons in FY22.

Despite last year’s problems, cotton farmers are enthusiastic about the fiber harvest. According to the latest data from the Gujarat government, as of July 17 last year, farmers have already completed sowing cotton on 2.53 million hectares of land in Gujarat. This area is slightly smaller than last year’s area of ​​2.55 million hectares, but the sowing season will last at least two more weeks and the total planted area is expected to exceed last year’s area.

After peaking at around lakh per candy, the domestic cotton price is currently between 56,000 and 57,000 lakh per candy. This cotton price is in line with international prices and will increase the competitiveness of Indian cotton in the world market.

According to PR Roy, a seasoned insider who was at the helm of a leading textile company and is currently a business partner at Diagonal Consulting, “despite the price parity of the domestic market with international markets, there may not be any significant change in exports from India as overall demand for raw cotton/fiber has declined. Recycling and reprocessing of the cotton will be carried out on a significant scale and dollar-rupee exchange will also play an important role as it will make exports incompatible for Indian producers.”

He added: “As a major cotton player in the world market, we are not doing anything special to realize our export potential. If we want to reach our full potential, we need to focus our minds and thoughts on converting the available raw materials into high-quality finished apparel products. The added value is necessary as the high-end market has the potential to absorb the products.”

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