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Indian denim industry poised for growth amid challenges & innovation

17 Jan '25
6 min read
Indian denim industry poised for growth amid challenges & innovation
Pic: Adobe Stock

Insights

  • India's denim industry is growing, driven by rising income, fashion trends, and sustainability.
  • With Gujarat leading production, the market is set to reach $9.15 billion by 2026.
  • Challenges like high raw material costs persist, but innovation, technology, and exports offer opportunities.
  • Industry leaders stress sustainability, R&D, and strategic actions to strengthen India's global denim presence.
Denim has undergone a remarkable transformation—from a sturdy workwear to becoming one of the most popular and iconic textiles in the global fashion industry. From its humble beginnings to its cultural significance today, denim has woven its way into the fabric of societies worldwide and this journey is a testimony to its enduring appeal!

It was in the late 1970s that denim made a significant leap in fashion, shifting from utilitarian wear to becoming a staple in casualwear. However, it was only in the mid-80s that denim production technology was introduced in India, setting the stage for the growth of a booming industry. The rest is history.

Over the years Indian denim industry has evolved into one of the most dynamic hubs for denim manufacturing globally. India’s contribution to this global trend is particularly notable, with Gujarat, often referred to as the ‘Denim Capital of India’, playing a pivotal role. The state produces an impressive 60-70 per cent of the country’s denim fabric and ranks third in denim production worldwide.

The Indian denim market has experienced tremendous growth in recent years, with an annual growth rate of 8 to 9 per cent. Multiple market studies and projections suggest the market is set to touch $9.15 billion by 2026, a rise of $3 billion from $6.15 billion recorded in FY2023. This steady growth is driven by several factors, making the market both challenging and full of opportunities.

“Geopolitically, we are in uncertain times, which impacts the market. The market is fluctuating constantly, and buyers now expect shorter lead times to minimise inventory, a trend that has both positive and negative aspects,” Vedant Agarwal, the Chief Executive Officer at Suryalakshmi Cotton Mills Ltd, told Fibre2Fahion.

For manufacturers, shorter runs mean less efficiency, but it also helps in reducing inventory levels, feels Agarwal.

Suryalakshmi Cotton Mills Limited is one of India’s leading integrated premium yarns to denim manufacturing entities, and over the past twenty years or so, the company has evolved into a premier Original Denim Manufacturer (ODM), serving leading global and domestic brands, and holding a dominant market share in the premium denim segment.

“The Indian denim market has shown some stability of late, but with the significant increase in manufacturing capacity, we believe the market should ideally grow at around 5 per cent annually. While this growth aligns with the rising per capita consumption of denim, it may soon outpace domestic demand, making it crucial to boost exports,” said Gautam Ganeriwal, Executive Director at Sitaram Spinners Pvt. Ltd. in an earlier interaction with Fibre2Fashion.

He identified high cost of raw materials a major obstacle hindering the growth trajectory. “One of the key challenges we face is the high cost of raw materials, which constitute about 80 per cent of yarn production cost. Compared to other countries, India’s raw material prices are significantly higher, spandex is around 30 per cent more expensive, polyester is 25 per cent higher, and cotton cost is more than 10 per cent. These elevated costs push product prices up and make it difficult for Indian manufacturers to compete globally,” Ganeriwal said while explaining the existing dynamics of the denim industry.

Headquartered in Hyderabad, Telangana, Sitaram Spinners is a key player in the yarn sector, particularly within the denim and bottom weight segment. Currently, approximately 75 per cent of its products cater to the denim and bottom weight market, with the remaining 25 per cent serving various other applications.

As the market continues to grow, various factors only add new dimensions to the fast evolving denim sector. The most important of them all is perhaps sustainability.

“Sustainability is not just an option; it is a necessity. In India, sustainability has long been embedded in our production practices. Indian denim mills, including ours, have been at the forefront of sustainable practices,” claimed Ganeriwal, a sentiment echoed strongly by Agarwal as well.

“Sustainability is a significant part of our strategy, and currently we are the only denim mill in India spinning synthetic sustainable fibres. We spin recycled fibres in polyester and rayon, all used for denim. This includes recycled coarse spun polyester yarn with Lycra and polyester viscose yarns with Lycra. We also produce dyed synthetic yarns and have started exploring sustainable fibres like Tencel, Modal, and Ecovera,” said Agarwal.

The rising disposable income is amongst the key drivers of denim’s growth in the domestic market. As more people enter the middle and upper classes, their purchasing power increases, fuelling demand for fashion products like denim, even as western fashion trends continue to influence the domestic market.

Younger consumers are increasingly seeking fashionable and stylish clothing, with denim being a favoured choice for both casualwear and formal occasions. This shift in fashion preferences, combined with the broader availability of denim, has helped spread denim’s appeal beyond urban centres to smaller cities and rural regions. This has only increased the competition as manufacturers innovate to meet the varied consumers’ demands. Factors such as fabric handle, finish, and price are key differentiators in selecting denim for different market segments.

Innovation in design and quality also plays a significant role in attracting higher premiums and increasing the demand. So, as the denim industry continues to grow, the emphasis on innovation and quality takes centre stage as India holds on to its position as a major player in the global denim market.

“India has the potential to become a centre for innovation in denim. By investing in technology and R&D, we can lead the way in creating new products and processes that set global benchmarks and attract international buyers,” underlined Ganeria as he called upon industry players to focus on product diversification to keep ahead of the competition.

Beyond traditional denim, exploring new applications and blends that cater to emerging fashion trends is the need of the hour, industry players observed. They added that this could involve smart textiles, functional finishes, and diverse yarn blends to meet the evolving needs of global consumers.

While the Indian denim market is on a growth trajectory, strategic actions are needed to unlock its full potential on the global stage, many industry players believe. They emphasised the need to address current challenges while keeping an eye on the future. 

“The quality of denim produced in India has improved considerably and is now on par with global standards. Local manufacturers are delivering world-class denim in terms of quality, output, and serviceability. We anticipate that as interest rates in the US begin to decline and per capita consumption in the US and Europe increases, there will be renewed demand for textiles. This expected recovery in the global market could positively impact the Indian denim industry, which has experienced subdued demand over the past year and a half,” concludes Ganeriwal on a positive note.

Fibre2Fashion News Desk (DR)

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