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Indian denim takes Bangladesh route to reach China

19
Dec '11
Amidst a plethora of reasons like depreciation of Indian rupee, appreciation of the Chinese currency, rising cost of labour in China, slowdown in Western economies, and less cost of labour and power in Bangladesh, Indian denim fabric is reaching China, getting stitched en route in Bangladesh.

Since June, Indian rupee has witnessed a depreciation of around 20 percent against the US dollar. During the same period, the Chinese currency yuan has appreciated by 4 percent against the US dollar.

As a result, making jeans in China has become costlier as China imports cotton from India to make its denim. Moreover, there is an increase in wages in China. Also, there is a rise in domestic consumption.

Owing to all these factors, the Chinese are finding it more economical to buy Indian denim compared to their domestically produced denim. Hence, China has started importing denim from India for its own domestic use as well as for export to other countries.

Explaining the demand situation for denim, Mr. Vikram Oza, Director - Finance, Jindal Worldwide, an Ahmedabad-based denim manufacturer, told fibre2fashon, “The overall demand from the US and Eurozone is declining due to slowdown in their economies. On the other hand, the denim market has not penetrated to the extent required in other economies having large population like China and India.”

“In the US, the per capita consumption of denim is around 8 pairs per annum. In comparison, it is 0.3 in India and less than 1 in China. So, there is a demand in India and China to come up to the average level of 2 or 2.5 pairs per person,” he adds.

Briefing about the route taken by Indian denim to reach China, he informs, “Labour cost in China is rising these days. So, their route is through Bangladesh and Vietnam, more particularly Bangladesh. The fabric produced in India is first going to Bangladesh. There the minimum wage is around Rs. 2250 per month, whereas in India it is Rs. 7000 per month. Next factor is the power costs. Power cost in India is Rs. 5.50 per unit while it is around Rs. 3.50 per unit in Bangladesh. The slowdown in the European market is also helping diversion to China because of the growing demand for denim there.”

Fibre2fashion News Desk - India


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