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

 

Upshotof Rupee Depreciation:


Indian rupee has depreciated byapproximately 20% since April 2008 onwards. Economic analysts believe that theoutflow of funds from the stock markets is the key reason for the drop. Thisdepreciation has several repercussions, with a mixed effect on the country'seconomy. Indian garment industries armed with depreciating currency values havegarnered a big share of the global export market. Depreciating rupee valuegives a competitive advantage to the Indian exporters thus boosting theirexports. Indian denim is gaining a competitive advantage in the globalforefront. Manufacturers in the denim units are involving 100% of theirproduction capacities to make optimum utilization of the present situation. Thishas also seen a fruitful result of increase in their profit margins.

 

China's Turmoil boosts the Indian Denim Sector:

 

Indian denim industry isstarting 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 staggeringfrom an augment in its currency value, increasing labor costs, fuelelectricity, 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. Manymanufacturers are curtailing their export orders and are involving in domesticsupplies. 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 Olympicsis now available at Rs. 380. Along with the Indian textile mills that havealready grabbed a sizeable portion of Chinas market share, the denim units arenow gearing up, and have started working in full capacity exhibiting increasedprofit margins upto 7-8%.

 

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

 

Denim markets in US and EU areexperiencing a downturn due to the economic turmoil. Other Indian counterpartslike Pakistan, and Bangladesh who are also key players are now facing problemsin meeting their export commitments due to internal problems. This further favorsthe 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