India’s cotton textile industry is more than an economic pillar—it’s the lifeblood of nearly 60 million individuals. From the efforts of over 6.5 million cotton farmers cultivating their fields to the vast network of workers engaged in processing, trading, and turning raw fiber into fabrics, this sector intricately weaves livelihoods across the nation.
While grappling with prolonged challenges like climate change, uncertain economic conditions, and trade disruptions, the industry now has reason to look ahead with hope. According to rating agency Crisil Ratings, the Indian cotton textile industry growth is forecasted to reach 7–9% in the current fiscal year, marking a significant rebound from the 2–4% recorded last year.
Growth Restored by Exports and Domestic Stability
The expected boost in revenue is largely attributed to strengthening export demand and sustained domestic consumption. As per recent industry analyses, the resurgence in export volumes will be a key growth driver, supported by a modest increase in yarn prices. Moreover, operating margins, which saw a resurgence last year, are projected to improve by an additional 50–100 basis points this year. This improvement is underpinned by stable cotton yarn price spreads and enhanced cotton availability, thanks in part to procurement initiatives from the Cotton Corporation of India (CCI).
These projections are drawn from a study of 70 leading spinning companies, which collectively account for 35–40% of the industry’s total revenues.
Revival of Exports to China: A Turning Point
One of the major factors driving optimism is the recovery of yarn exports, particularly to China. Exports form around 30% of the sector’s overall revenue, with China alone contributing approximately 14%. Last year, India’s yarn shipments to China dipped due to an unexpectedly high domestic cotton yield in China, which triggered a 5–7% decline in India’s total yarn exports.
This year, however, the scenario looks brighter. With China’s cotton production returning to normal levels, India’s yarn exports are projected to grow by 9–11%. This recovery is expected to help Indian spinners reclaim market share and leverage steady domestic cotton output to strengthen their position in the global arena. Furthermore, India remains a competitive player in U.S. textile exports, especially as higher tariffs on Chinese goods continue to redirect demand toward Indian manufacturers.
This competitive advantage is also forecasted to bolster downstream segments such as home textiles and ready-made garments, with revenue growth anticipated in the range of 6–8%.
Strong Cotton Supply to Bolster Profitability
On the raw material front, the steady procurement of cotton by the CCI during the 2025 cotton season is expected to ensure uninterrupted supply, reducing inventory losses for manufacturers. This is likely to drive profitability further, with operating margins projected to improve by 50–100 basis points this fiscal year, building on last year’s gains of 100–150 basis points.
Improved operating metrics are also set to stabilize credit profiles within the sector. Many spinning companies are expected to maintain conservative capital spending, limiting the need for additional debt. Moreover, better cotton availability is anticipated to reduce the burden of maintaining high inventory levels, easing the demand for excess working capital.
As a result, key financial metrics such as the interest coverage ratio are expected to improve to 4.5–5 times, compared to 4–4.5 times last year. Meanwhile, gearing ratios are likely to remain steady at approximately 0.55–0.6 times.
Challenges Persist
Despite the positive outlook, certain risks continue to loom over the industry. Fluctuations in global trade policies, rising inflation, and slowing economic growth in key export markets such as the U.S. could temper optimism. Additionally, any significant deviation in domestic cotton prices compared to global benchmarks may disrupt the delicate balance of cotton textile industry growth.
A Resilient Road Ahead
India’s cotton textile industry has long been a cornerstone of its economy, sustaining millions through its extensive supply chain. While the sector faces hurdles, the forecasted recovery in exports, robust domestic demand, and enhanced cotton supply position it for a strong fiscal year.
Navigating the challenges of trade uncertainties, economic volatility, and global competition will remain critical. However, the sector’s resilience and adaptability, combined with favorable market conditions, offer a promising pathway for growth in the years to come.
