Which Country Is The Major Importer Of Indian Yarn? Explained

The global yarn textile industry involves numerous countries producing and processing cotton yarn to make various textile products. India ranks as the second most prolific producer of cotton yarn, and this Asian nation generates 4.762 million tons of this textile, which accounts for 21% of the world’s cotton yarn production.

India currently enjoys a market edge over other competitor nations because it has a skilled workforce and enjoys economies of scale, leading to lower textile production costs.

So, which country is the primary importer of Indian yarn? Statistics point to China as the leading importer of Yarn from India. According to data from Statista, China imported textile cotton yarn worth $7204.8, and a significant portion of these imports came from India. After china, other top importers of yarn from India include Peru and Bangladesh.

In October 2020 alone, china imported yarn textiles worth $35.94 million from India, and this figure was a 22.3% decline compared to the previous year’s figure around the same period. Although China significantly reduced its import due to implications brought about by the pandemic, textile firms in Jiangsu, Shandong, Zhejiang, and Guangdong provinces began increasing importing in late November and December.

In November 2020, a yarn processor in Ningbo, China, stated that it would import up to 200,000 tons of cotton yarn from India, and a significant part of it would come from India. Nonetheless, China’s yarn imports from India have seen better days.

During the 2013-2014 period, India exported 1.313 million tons of textile yarn to china; however, in the 2019-2020 period, these exports amounted to only 0.959 million tons, a significant 26.9% drop. Apart from the pandemic, this drop in exports to China is also due to a decrease in India’s cotton production and increased duty fees when exporting to yarn markets such as China.  

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Since India’s domestic yarn consumption is low and the country still has a surplus supply of cotton yarn, that could hurt the local spinning industry. For this reason, some of India’s goes to neighboring nations such as Pakistan and Bangladesh.

Why is China the leading market for Indian yarn?

Currently, China ranks as the largest producer, importer, and exporter of yarn textiles globally. In recent years the country’s textile industry created revenue and many jobs. For instance, in 2015, this industry contributed 7% of China’s total GDP.

Although the overall textile industry figures from china are on the decline due to increased costs of production and trade wars with the US, the local textile market is thriving due to high domestic demand. China had 1.398 billion citizens in 2019, and this vast population provides a ready market for its yarn products such as apparel.

Since the local cost of yarn production is high, China prefers to source its textile raw materials from other nations such as India, where yarn prices are low. Once China imports the yarn, Chinese industries can process it into quality textile products that sell quickly due to its excellent infrastructure and supply chain management.

India lacks the capacity and capability to process all of its produced yarn, and this is where China comes in. Since China already has a ready yarn textile market (both local and international) and the necessary industrial framework to handle mass textile production, it serves as a natural market for Indian yarn.

The USA could prove to be a significant Yarn importer if India plays its cards right

The USA is in a trade war with the People’s Republic of China, and it even banned the import of Chinese cotton yarn. Although this may seem detrimental to China’s industries, the domestic demand and other international importers are still purchasing china’s textiles.

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However, as this trade war rages on, India has the opportunity to fill the supply gap left behind after the Chinese cotton ban. However, India is yet to grasp this opportunity fully, but why is it so? The short answer is, there’s an increase in cotton prices within the Indian domestic market.

As mentioned earlier, China is facing a demand increase in yarn, which in turn is resulting in price increases within the local Indian market. With yarn prices increasing, some domestic textile firms and exporters find it hard to source cotton yarn at low prices.

About 90% of Indian clothing and yarn manufacturers fall under small and medium enterprises, and they’re finding it hard to get cotton due to the price hike. These businesses are rapidly losing business to other yarn markets such as Vietnam and Bangladesh.

If India wishes to exploit the American yarn market, it needs to formulate a well-thought-out strategy that boosts and supports local textile firms. Such a plan can help scale up yarn production and increase supply to importing countries like the USA and China.

The Indian government is already developing numerous initiatives to promote exports within the textile sector. For instance, In April 2021, the government unveiled plans to reduce the textile industry’s dependence on foreign machine equipment. The administration promised it would partner with local engineering corporations to improve machinery production.

Vietnam may pose a threat to India’s position as the leading yarn importer to China

During the 2009-2018 period, china’s yarn imports from India rose by 13.99%, whereas Vietnam’s cotton yarn imports to China increased by 29.05% within the same period. According to Yarnandfibers.com, India’s market share in China’s yarn industry is currently at 22.9% after it dropped from 32.6% between 2019 and 2020, on the other hand, Vietnam’s market share increased from 17.9% to 29.9%. These statistics show that India faces stiff competition from Vietnam over the largest cotton yarn market (China).

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Additionally, Vietnam enjoys duty-free yarn exports to China, which encourages Vietnam to export its cotton textiles in large quantities. India doesn’t have such a privilege within the Chinese market, and they have to pay excise duty when exporting yarn and related products. Some experts state that china may be inclining towards choosing Vietnam as its preferred yarn source, but competitive Indian yarn pricing can help India stay in business.

India is among the most prolific yarn producers globally, and its primary export market is the People’s Republic of China. Other countries that majorly import Indian yarn include; Bangladesh, Pakistan, and Egypt.