Supply chain and fuel disruptions triggered by the war in the Middle East have dealt a heavy blow to many Indian factories, but cotton yarn makers like Fiotex Cotspin are increasing production amid unprecedented demand from clients in China.

India, the world’s second-largest cotton producer after China, relies on imports for roughly 15% of its raw cotton and about 20% of its yarn to meet demand.

As the war in the Middle East disrupted trade routes, cotton supplies to China from other countries declined, making India a preferred and nearby sourcing point, Indian traders said.

Combined with tight domestic cotton supply, delays in shipments coming from U.S., Brazil amid strained energy supplies have driven a rapid rise in imported yarn by China.

The rupee has weakened about 7% against the yuan this year, making Indian cotton yarn imports cheaper for Chinese buyers.

Ripple Patel, managing director of spinning mill Fiotex in the western Indian state of Gujarat, said his export order book has grown by 40% in recent months, and his factory is at 100% capacity utilisation, compared to 90% earlier.

“We had order say about for another 65 to maybe probably 75 days and the price realisation is good and hopefully we will be receiving this kind of order in near future also,” Patel told Reuters.

China's National Textile and Apparel Council declined to comment when asked for comment on the rising imports from India.

Many manufacturing hubs in India have suffered due to shortages of commercial gas and an increase in the prices of inputs like plastics and industrial spare parts. But spinning mills have been spared fuel disruptions as they largely run on grid or solar electricity, industry executives said.

Mills in Gujarat are benefiting more than those in India's southern states since they are close to both cotton-growing areas and ports.

The southern state of Tamil Nadu houses thousands of spinning mills, but they face higher transport costs because raw cotton has to be sourced from western and central India.

-Amit Dave, Shivangi Singh, Sunil Kataria/Reuters