New Delhi, Feb. 19 -- Although domestic cotton prices remain higher than international prices, the overall demand scenario seems to be improving according to a report by Systematix Institutional Equities Research.

It can recover spread in the coming quarters to support the profitability and operational efficiency of Indian textile companies.

The report says the demand outlook remains strong for the Indian textile sector because of the normalizing channel inventories at the global retailer level, likely tariff hike by the US on China, rising labour costs in Vietnam, and ongoing political instability in Bangladesh.

The report however raised concern about the capacity constraints of the Indian garment manufacturers, which could limit thei...