Many denim producers in India, who have increased their production capacity in the past anticipating a rise in demand in future, are facing a problem of surplus capacity.
“Currently, the denim industry is facing a situation of over capacity because there is almost a thirty percent surplus in production,” states Mr. Aamir Akhtar, CEO, Lifestyle Fabrics-Denim, Arvind Mills, in an interview with fibre2fashion.
“Consequently, there will be a pressure on the manufacturers who are not producing differentiated products and at the same time on the markets of undifferentiated products as well,” he predicts.
Agreeing with the problem of surplus production in the industry, Mr. Rajesh Dudeja, the Founder of Denim Club India reasons, “After looking at the continuous profits in the balance sheets of other denim manufacturers and also by realizing that the slowdown did not affect the denim mills the way it affected the rest of the textile industry, many Indian businesses went in for setting up of new denim manufacturing units in the last couple of years.”
“The clearly visible fast-expanding domestic demand was also a driving factor in capacity expansion and several mills added lines and increased production in anticipation of a further rise in demand,” he explains.
But Mr. Dudeja is hopeful that the situation will change soon. “Because of the decline in denim production in China and USA, many Indian mills, which had started witnessing a slight dip in demand recently, will again be in a commanding position and the denim prices might also see a rising trend in the near future,” he opines.