Indian denim industry poised for mega growth

In spite of the difficult times the world went through due to the economic recession in 2008-09, the Indian denim industry has managed to hold its own and grow rapidly. In fact, in the last five years it emerges that both domestic markets and

exports have grown. The domestic market has grown from $30 billion to $47-52 billion and the total market from $46 to $78 billion. “This is remarkable because in a world filled with uncertainty one is witnessing 11 per cent growth over a five-year span,” says Rajiv Dayal, MD, Mafatlal Industries.

Dayal says this in his scintillating paper, “Overview of the Indian denim business”. It focuses on four main points concerning the sector in India: growth of the industry, current status, the next decade and finally, the challenges. Dayal is of the opinion that although the  Indian denim story is only about 25 years old  the market is rapidly growing at around 10-12 per cent in the last decade. The main drivers for growth are the favorable young demographic profile, rapidly increasing incomes, more organized retail and penetration of brands into smaller towns and cities, the advent of international buying houses, more garment exports and other positive factors.

“The Indian market is not a fashion market. I would say 50 to 60 per cent of the market is a basic market. Of the rest, 20 to 25 per cent is value added and just 5 to 10 per cent is truly fashion. You can buy a pair of jeans today in India for Rs 300. That’s 30 to 40 percent of the market. That will continue going forward.” He feels the market will grow in three segments, the basic segment, the value-added segment, the fashion segment. Mills will participate in each of these segments.

At the moment India has 26 mills which are making 550 million meters a year. Of this the Indian market is 350 million which is basically the domestic fabric used to make Indian products and the other is used to make garments for export. If one compounds it at 10 per cent, it reaches 570 million meters in 2015 and 910 million metres in 2020-21. By that time every guy with mobile may have a pair of jeans. Exports growth are projected at 5 per cent, not a dramatic jump. “It has the potential to grow from 550 million to 1.2 billion meters usage. If the industry has to run at 80 per cent capacity, one needs to see this market grow to a billion meters in the next five years and 1,500 million meters in the coming decade. So we can expect 550 to 1200 million meters in the next 10 years,” he adds.

However, the industry will face many challenges on the way and the way forward will be through advocating product development and fashion forecasting groups for the Indian and global markets; development of relationship with international brands on the basis of “equality” and other uses.