The Indian Denim Industry is moving ahead towards a positive pace, despite the textile sector being troubled by both domestic and international tribulations. Technological innovations and value additions from generic areas like biotechnology, and nano technology have helped the industry to face the intense competition at the global forefront. Apparently, a sharp depreciation in the Indian currency value, and the present economic slump in the Chinese economy also favors the Indian denim industry. As the News Desk of Fibre2fashion reports, "Industry insiders are pleased to observe the revival of denim industry, which since 2006, was going through a rough phase".

 

Upshot of Rupee Depreciation:


Indian rupee has depreciated by approximately 20% since April 2008 onwards. Economic analysts believe that the outflow of funds from the stock markets is the key reason for the drop. This depreciation has several repercussions, with a mixed effect on the country's economy. Indian garment industries armed with depreciating currency values have garnered a big share of the global export market. Depreciating rupee value gives a competitive advantage to the Indian exporters thus boosting their exports. Indian denim is gaining a competitive advantage in the global forefront. Manufacturers in the denim units are involving 100% of their production capacities to make optimum utilization of the present situation. This has also seen a fruitful result of increase in their profit margins.

 

China's Turmoil boosts the Indian Denim Sector:

 

Indian denim industry is starting to inch closer with the Chinese economy. Textile industries in China are facing unfavorable situations. After dominating the global apparel market, China is currently losing its competitive advantages. The countrys industry is staggering from an augment in its currency value, increasing labor costs, fuel electricity, and chemicals. A cut in the domestic tax rebates, pollution curbs, and official moves further hammered nails in the economy of the dragon nation. China had experienced a production cut upto 40% due to these rising costs. Many manufacturers are curtailing their export orders and are involving in domestic supplies. Due to lack of demand, prices of Indigo blue imported from China have started declining. Indigo blue which was available for Rs. 450 per kg prior to Olympics is now available at Rs. 380. Along with the Indian textile mills that have already grabbed a sizeable portion of Chinas market share, the denim units are now gearing up, and have started working in full capacity exhibiting increased profit margins upto 7-8%.

 

Mr. Rajiv Dayal, Managing Director, Mafatlal Denim Ltd, in an exclusive interview with Fibre2fashion says, "Production cut down in China has given advantage to Indian Denim Industry. China's competitiveness is reducing due to their appreciating currency and increase in the costs of power and labour. Several mills have curtailed their capacity. Hence, this presents an opportunity for Indian manufacturers to increase their global market share, by capturing the market lost to Chinese producers".

 

Denim markets in US and EU are experiencing a downturn due to the economic turmoil. Other Indian counterparts like Pakistan, and Bangladesh who are also key players are now facing problems in meeting their export commitments due to internal problems. This further favors the Asian markets, and enables them to expand; though at a slow pace.

 

References:

 

  1. "Indian denim companies step on the gas as rupee falls", Apparel Views, Vol - VII, Issue 11, Nov 2008.
  2. http://www.thehindubusinessline.com
  3. http://economictimes.indiatimes.com
  4. http://www.equitymaster.com