Soaring cotton prices put textile mills under pressure
Indian textile mills are facing significant operational pressure due to a sharp rise in cotton prices, despite high demand for yarn. Industry experts suggest that global supply constraints and increased demand are driving costs, necessitating potential government intervention.
Why it matters
Rising raw material costs in the textile sector threaten the profitability of a major export industry and could impact consumer clothing prices.
Textile mills are witnessing a revival in cotton yarn demand, with capacity utilisation crossing 90%, but a sharp rise in cotton prices is raising concerns over the sustainability of operations.
“The demand for cotton yarn started reviving almost five months ago and currently, mills are not holding much yarn stocks,” said Durai Palanisamy, chairman of the Southern India Mills Association (SIMA).
Cotton prices have risen sharply since mid-March, with domestic prices increasingly moving in line with ICE Futures, he said, adding mills are also maintaining relatively low inventories, with most having less than two months of cotton stock.
Cotton prices, which remained in the range of ₹51,700 to ₹57,000 a candy between October last year and the end of March 2026, had climbed to ₹70,000 a candy on September 2 on an ex-gin basis.
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