Views expressed in the article are the personal opinion of the author.
India started very late in Denim despite the fact that the oldest industry in India is the textile industry, we are rich in cotton and denim is basically a cotton based fabric. Denim trend in India started during the 80s. Due to lesser demand in the domestic market, India was exporting almost two thirds of its denim production when we were producing 300 million meters per annum.
With the passage of time the domestic demand started growing. Simultaneous to the increase in capacity, domestic demand also increased.
In India demand for Denim has been growing at a phenomenal pace in the recent years. Around 5 years ago, the annual production capacity was around 600million meters, and today it is approximately around 1000 million meters. In the past two years, Indian denim industry has seen an increase in capacity of about 200-250 million meters. New players have come in, and existing player shave expanded their operations. By 2015, the production capacity is expected by industry analysts to grow and reach around 1200 million meters.
An interesting fact is that during the past 12 to 18 months, there has been a notable decline in the production of denim fabrics in US and China, and hence supplies from these countries have been declining. As a result, approximately 150-200million meters of exports are expected to be added to the Indian Denim industry.
There
are jeans manufacturers in Bangladesh who were sourcing their fabrics from
China. With China is unable to meet their requirements, these manufacturers are
looking towards India as the next preferred sourcing option. Similarly for companies
which were sourcing denim from the US, with the cut down in Denim production in
US, some of their orders are expected to come to India. These extra export
orders will certainly prove to be a boon for the capacity expansion which has
been going on.
When
this expansion started in 2009-2010 it was anticipated that India will reach a situation
of oversupply of denim fabrics. But just as the Indian denim industry was
approaching a temporary saturation point after which the oversupply situation would
have occurred, this interesting scenario has developed which is likely to result
in 150-200 million meters of extra orders for exports. This extra outflow of
denim is expected to stabilize the production and the expansion of the Indian
denim industry. Had there been a situation of oversupply, the expansion would
have slowed down. But in the current scenario, the expansion will be driven
further by the positive environment.
Now,
in the current situation there will be no oversupply, denim manufacturers will
continue to make profits, and as result more new players are likely to enter
the segment, while the existing manufactures will continue to expand their operations.
This means that the 1200 million meters mark, as earlier anticipated for 2015,
could actually be crossed over, and the denim production in India could touch
the 1500 million meters per annum mark in the subsequent two to three years.
About
the Author:
The author is the founder of Denim Club India, a unified platform for all denim professionals in India.
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