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While the global economy, led by the US, has started showing signs of improvement, India’s denim makers have better prospects for exports. Experts noted that with cotton value chain improving in the country, India’s denim exports are poised to see rapid growth.
Denim players in India produce around 700 million metres of fabric every year, of which 32 per cent gets exported. This year, denim exports are estimated at 200 million metres.
According to the International Cotton Advisory Committee (ICAI), the value of annual denim exports globally fluctuated between $3 billion and $3.9 billion during 2001-2011. Yet industry estimate suggested India holds less than five per cent of the global denim exports.
Experts noted that cotton value chain from cotton production to yarn manufacturing and textile making has improved substantially with automation at various levels. Yet some challenges are still there for the industry.
“India’s cotton value chain is improving, but there are three key challenges, including capacities to meet overseas demand, quality of product and the competitive pricing. If our units go for technology integration, we can see a substantial reduction in costs and multifold rise in production,” said Rajesh Dudeja, founder of Denim Club of India.
Industry sources revealed that over four-five years, denim production has seen rapid growth, but technological expertise is still an issue. According to experts, denim is the only segment in the textiles industry in India that has the potential to grow manifold.
“Past three-four quarters have been good for denim players. We are giving tough fight to our competing nations, including Turkey and Bangladesh. But there is still much prospects for growth,” said Viren Mehta, head-marketing, Fibre-2-fashion.com, a B2B portal for cotton and textile industry.
In the first quarter of the current financial year, denim players have registered double digit growth in bottom line. All leading players—Arvind, KG Denim and Nandan Exim—have each posted 20 per cent growth in their net profits for the said period. This shows denim players’ margins are improving.
“Till last year, many companies faced cost escalation and poor quality, thereby lesser exports. Even in the last quarter of the previous financial year, small-sized players faced a beating in export business due to weak global scenario,” said a senior official of an Ahmedabad-based denim player.
“But now, we are booked till the first quarter of the next fiscal. Cotton prices are expected to remain stable and we see good margins for this year,” the official said.
ICAI noted world trade in denim fabric fluctuated between 530,000 tonnes and 760,000 tonnes per year between 2001 and 2011, and averaged 670,000 tonnes over those years.
China is the major exporter of denim, about 273,000 tonnes in 2012. The second largest exporter was Pakistan, with 70,000 tonnes, followed by Turkey, India, and the US with 37,000 tonnes, 36,000 tonnes, and 35,000 tonnes, respectively.
