KG Denim Limited is a denim and apparel fabric manufacturer, which caters to fashion brands and retailers across the world. The company offers various products, such as denim fabric, apparel fabrics, home textiles, and others. Sriramulu Balakrishnan, MD, KG Denim discusses the growth story of denims and the consequences of global politics on the Indian textile industry.
How big is the global denim market? What is the percentage claimed by India in it?
The global denim demand would be around $55 billion (2015) and is expected to be about $60 billion expected by 2021. India's share would be $1.2 billion, which is about 2 per cent.
What are your expectations from the GST?
At present, fabrics do not attract excise duty or sales tax (in most states in India). Post-GST, the textiles industry expects that it should be nil rate of tax or be minimum. Representations have been made to the ministry of textiles by TEXPROCIL. Branded apparel is subject to both excise duty and sales tax. Any GST on fabrics and yarn can be utilised by brands and retailers as credit for their operations.
Will the presidency of Trump and the Brexit have a major impact on the Indian textile industry?
US imports of textiles and garments from India are already subject to tariff. India does not enjoy any preferential tariffs relating to the US. Any increase in import tariffs will not affect Indian exporters, and this increase will be applicable to all countries. India's export of denim fabrics is to many countries in Asia, Africa and South America which in turn are exporting garments to the US on a favourable nation policy. Only after concrete policies are announced in the US, can we discuss the impact of protectionism.
Brexit, on the other hand, will help Indian manufacturers as the bilateral deal with the UK will be better than the current EU system, where they provide tariff advantages to Pakistan and China. We see advantages in Brexit.
What is the rate at which the demand for denim is growing? What forces are driving this demand?
The demand for denim in the domestic market has grown at a strong rate of about 7.5 per cent CAGR in the past 6 years (2009-10 to 2015-16). Domestic market demand will continue to grow, with short-term variations due to demonetisation, fashion and domestic economic cycles. Export demand is currently stagnant due to uncertainties in many overseas markets.
How has the demand and consumption for denim evolved over time?
In the 1990s, there were as few as four players; currently, there are 35 denim manufacturers with a capacity of around 1400 million metres per annum. Growth has been exponential. The Indian denim market has further room to grow, but at a slower pace. KGDL products are positioned for the fashion business segment, while the new capacities are aimed at mass market products.
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