Margins may improve after a long wait as denim industry sees glut easing

No new capacities likely, so market will be able to absorb current production; however, rising cotton prices could offset the benefits of operating leverage and modest increase in fiscal incentives

After quite a few years of facing a glut in the domestic market due to excess capacity, the Indian denim industry may finally see the demand-supply gap narrowing. In addition, with mass consumption demand also expected improve even as denim players go for more premium products, gross margins in the industry are also expected to improve by 3-4 per cent this year.

"There was a mismatch in demand and supply. But in the last couple of years, due to demonetisation and Goods and Services Tax (GST), the denim market has seen a slowdown and the overcapacity is getting adjusted. Also,