December 19, 2021
Exorbitant Price Rise of Cotton Yarn: Textile Industry is coming to a standstill

M Natarajan

THE spinning mills announced a price rise of Rs 50 per kg for cotton hosiery yarn on November 1, 2021, in Tirupur an industrial city of Tamil Nadu. There are more than 4,000 units functioning, in which employment to nearly four lakh people is provided directly. This region is also producing cotton knitted innerwear and garments for the domestic market worth Rs 20,000 crore per year and garments for export - Rs 27,000 crore. Hearing the yarn price rise, the Tirupur textile industry termed this year Diwali as “Black Diwali” for them.

The above price rise of cotton yarn did not happen due to a shortage of cotton crops (due to insufficient rain or attack by pests on cotton crops). The reason for the price rise of cotton and hence yarn price is that this time there is a worldwide shortage of cotton which caused an exorbitant price rise of yarn created due to a political action initiated by America against China. Thus, cotton prices in India and in turn yarn prices have escalated.

The US announced on January 13, 2021, an import ban on the cotton grown in the Xinjiang region, the northwestern province of China, where 87 per cent of the cotton crop output of China – one-fifth of world supply, is grown. These measures were taken in response to “allegations of forced labour and ill-treatment of Uighur Muslims of Xinjiang region of China”.

“Cotton picked in Xinjiang winds up in garments cut and sewn across Asia, from Bangladesh to Vietnam,” textile industry executives say. Due to the ban, US traders have already begun shifting their production lines. American companies ‘Gap’, ‘Nike’, and ‘H & M’ said their suppliers have stopped new cotton purchases from Xinjiang.

The ban may have contributed to rising demand for US cotton in recent months and a bump in global cotton prices, from 81 US cents a pound in mid-January to over 90 US cents a pound” (business – February 24, 2021).

The price of cotton in the Indian cotton market is always matched to the price of cotton of the world cotton market. In turn, the spinning mills fix the price of cotton yarn based on the cotton rate.

The US began “isolated sanctions” last year on Xinjiang textiles makers. Hence the price of cotton started rising from November 2020 in India and worldwide. On the New York Mercantile Exchange, cotton prices on October 30, 2021, have soared to a 10- year high of 117.99 US cents a pound (equivalent to Rs 69,950 a candy), as world cotton supply is kept aside by one-fifth due to the ban imposed by the United States on Chinese cotton. And in India too, the price of cotton is increased to Rs 66,000 per candy and spinning mills have hiked the yarn price by Rs 50 per kg on November 1, 2021.

The fact is, 95 per cent of cotton sowing and harvesting in Northern Xinjiang is completely mechanised. Where can there be “forced labour”? (China & Xinjian: Lies and Facts by Abinav Surya, May 1, 2021, Marxist Reader)

China’s president, Xi Jinping, however, is reported to have said that Hong Kong, Taiwan and Xinjiang are matters internal to China, as per China’s state-run Xin Hua News agency. (The Hindu February 12, 2021)

According to the industry experts, if the above US ban (against cotton from Xinjiang of China) is implemented fully, then it might create a major disaster in the cotton and other textiles and apparels supply chain all over the world” ( – March 01, 2021).


It is to be noted that the strength of the Indian textile industry is that “sufficient cotton is grown in India to cater to the needs of textile industry”. At present, as the cotton price is abnormally high in the world market, it is an opportune time to get a higher price for export garments from importing countries. The duty of a people’s welfare government should be to devise policies and ways so that this opportunity should be shared by all the sections of the cotton textile industry namely farmers, the spinning mills, fabric and garment manufacturers of hosiery, power loom and handloom sectors catering to the needs of the domestic market and garment exports.

Role of Cotton Corporation of India (CCI): For this, at first the government is to guide the Cotton Corporation of India (CCI) to procure cotton, though the prevailing market price of cotton is higher than the minimum support price (MSP). But the chairman of CCI said, “It looks like farmers will not require our (CCI) intervention now as the market prices are higher than MSP”. The textile secretary also told media persons on November 10, 2021, “we do not see a need for procurement this year” (The Hindu, November 11, 2021)

  • The important guiding principles for the functioning of CCI are not only to undertake price support operations but also to act as a dependable supplier of cotton to the textile industry. It is known that the cotton year is from October to September and normally the harvesting of cotton is during the months from October to March. At present, the CCI has just about 70,000 bales of cotton with it now. If CCI is not going to procure cotton for the cotton year of October 2021 – September 2022, private traders and multinational companies only would procure cotton from farmers. This year’s forecast of cotton crop output is 360 lakh bales (Cotton Association of India, October 29, 2021) which would be entirely in the hands of private traders and multinational companies after March 2022. After March 2022, the price of cotton would be increased further. Hence CCI should start procuring cotton now from farmers, as this is the harvesting period.           
  • The government should help CCI to procure cotton from farmers during this harvesting period of the 'cotton year' of October 2021 – September 2022 by providing sufficient funds at minimum interest.
  • The CCI should sell cotton only to the actual users especially micro, small and medium-sized (spinning) mills in a staggered manner till the end of the season and maintain buffer stock for the next season.
  • The government should not allow the export of cotton during this cotton year of October 2021- September 2022.
  • The government has to withdraw the customs duty of 10 per cent being levied on cotton imports.
  • 6. The spinning mills producing cotton yarn should not hike cotton yarn prices to more than that if needed due to an increase in prices of cotton.
  • 7. The government should permit the export of cotton yarn only to the extent of surplus yarn available after fulfilling the requirement of the domestic textile industry.


Two crore and forty-one lakh spindles are installed in spinning mills of Tamil Nadu out of the total installation of five crore and thirty lakh spindles in India. The total production of cotton and non-cotton yarn in India is 5659.58 million kg and out of which, 2003.20 million kg of yarn, that is, 35 per cent of yarn is produced in Tamil Nadu. If the requirement of cotton for the spinning mills of Tamil Nadu per year is taken as 40 per cent of the total Indian mill consumption of 292 lakh bales, 116 lakh bales of cotton are required for a year by the spinning mills of Tamil Nadu, whereas Tamil Nadu’s cotton crop output is only six lakh bales per year. An additional requirement of 110 lakh bales for Tamil Nadu is to be procured from other states, namely, Gujarat, Maharashtra and Telangana.

Hence, “The Cotton Corporation of Tamil Nadu”, a state government undertaking is to be established by the state government as a permanent remedy to stabilise cotton yarn price thus safeguarding the micro, small and medium-sized industries of knitted garments, power looms, handlooms and spinning mills which provide job opportunities for 25 lakh families of Tamil Nadu.