Retailers in the US and the European Union (EU) have been shifting their cotton garment orders away from China and Bangladesh, with Vietnam emerging as a preferred alternative in 2024.
India, too, appears to have benefited from this trend, with its cotton textile exports seeing a year-on-year growth of 20 percent during the April-December period of the current fiscal, according to the BusinessLine report.
Data from the Ministry of Commerce and Industry, compiled by the Cotton Textiles Export Promotion Council (Texprocil), suggests that India’s exports of cotton yarn, fabrics, made ups, and handloom products grew by 11.98 percent in December 2024 compared to the same month in 2023.
The overall growth for these products during April-December 2024 stood at 2.82 percent, while apparel exports rose by 11.5 percent in the same period.
China’s dominance in the US market appears to have taken a hit, with its market share dropping by 1% in 2023 compared to 2022, moving from 21.8 percent to 20.8 percent.
Analysts point out that each 1% decline translates to roughly ₹6,900 crore worth of lost business. While multiple countries have gained from this shift, India’s share in the US market inched up by 0.2% to reach 5.9%.
Another development that could play into India’s hands is the US administration’s introduction of new tariffs, ranging from 0 to 35%, on small parcels from China.
Industry insiders reportedly believe this could create hurdles for Chinese sellers operating on e-commerce platforms, making their small-parcel shipments less competitive.
While Vietnam has gained a larger share of orders, its sourcing strategy is raising some eyebrows. Reports indicate that Vietnamese manufacturers are buying more cotton from the US instead of India due to price differences. Indian cotton is reportedly more expensive than US cotton, and Vietnam has also been sourcing from Brazil and West Africa.
With Intercontinental Exchange (ICE) prices hovering at 66-68 US cents per pound, and Vietnam not imposing Customs duties on imports, the country seems to have a cost advantage. Meanwhile, in India, the benchmark cotton variety Shankar-6 is priced higher at ₹53,550 per candy, making exports less competitive.
Despite the shifting demand patterns, the cotton market in India seems stagnant. The Cotton Corporation of India (CCI) has been actively procuring cotton under the price support programme, reportedly buying 92 lakh bales at the minimum support price of ₹7,121 per quintal (for medium staple variety).
Some estimates suggest that CCI’s procurement could exceed 100 lakh bales.