QCO removal lifts apparel sector; polyester yarn growth to stay flat

India’s withdrawal of the Quality Control Order (QCO) on several polymer and fibre intermediates is set to lift cost pressures for downstream textile producers, particularly readymade garment exporters, as per Crisil Ratings.

India’s removal of QCO norms on polymer and fibre intermediates will lower input costs for textile exporters.
Polyester yarn manufacturers are expected to post flatter 3–5 per cent revenue growth as cheaper imports drag down realisations.
Interest cover is set to weaken to 2.7–2.9 times as crude volatility and tariff gaps continue to pressure the upstream segment.

The move will make raw material imports cheaper and support volumes, but polyester yarn manufacturers could see flat revenue growth of 3–5 per cent next fiscal due to lower realisations, heightened import competition and softened crude prices.

The Ministry of Chemicals and Fertilisers scrapped the QCO on November 12, 2025, reversing a mandate introduced in October 2023 that required BIS certification to curb the influx of cheaper Chinese polyester yarn. The change is expected to ease sourcing for apparel makers, who derive 25–30 per cent of their revenue from exports, a third of which go to the US.

The home textile sector, which earns two-thirds of its revenue from exports—55–60 per cent to the US—is likely to gain less due to its stronger tilt toward cotton-based products, Crisil Ratings said in a release.

Industry analysis of 20 polyester yarn producers, representing 40–45 per cent of sector revenue, indicates weakening margins and a decline in interest cover to 2.7–2.9 times next fiscal from 3.5–3.7 times this year.

Persistent tariff disparities with competing nations, fallout from US trade actions and volatility in crude-linked input prices remain key risks across the textile chain.

Fibre2Fashion News Desk (HU)