Indian Denim’s Promising Future in Face of Global Uncertainity
CXOToday has engaged in an exclusive interview with Mr Vinay Thadani, CEO- Vishal Fabrics Ltd
- Outlook on Indian textile and apparel industry
The Indian textile industry continues to contribute immensely with 4% to the global trade in textiles and apparel, 2% to the GDP and constitutes 7% of industry output in terms of value. However due to pandemic, disruption in supply chain, increased import duties and crisis like Ukraine- Russia war, the Indian textile industry has taken a major hit. This has resulted in subdued demand in Q2 & Q3 FY23 because of volatility of cotton prices. The Indian textile industry is now on the road to recovery and is expected to bounce back in near future.
- What is the future outlook for the denim industry?
Globally, the market is expected to reach US$87.4 billion by 2027, growing at 4.7% CAGR. While this number is not very encouraging, the same cannot be said for Indian denim market. Currently at 8%-9% CAGR, the Indian denim market is expected to stand around Rs. 91,894 crores by 2028. Despite of global slowdown, one can expect good demand in domestic market for upcoming quarter, as domestic market grows with its own CAGR which is much higher than that of global.
- What are the emerging trends in the denim industry?
Denim industry is very versatile and dynamic. Denim is never out of fashion and hence it is always in demand. To cater to the ever-growing demand, the denim market recurrently witnesses’ new trends and innovations of new varieties. As of today, soft and stretchable denim is in demand. Regular denim is 100% cotton, non-stretchable, and firm. Stretchable denim, denim spandex fabric is comfortable and softer than regular denim. Owing to the demand of stretchable denim, we have seen an increase in the use of spandex in the manufacturing of denim. The resulting product is lighter good quality denim that is comfortable yet fashionable for everyday wear.
- What are the key challenges before the denim industry at present?
Indian denim industry has huge growth potential. However there are a few factors that hinder this growth. Volatility of raw material prices and the dependency on China for raw materials are the major pain points for Indian denim industry. The import duty on these raw materials is high. However, the price of domestic cotton is higher than imported cotton. The government needs to consider devising and implementing Cotton Price Stabilisation Fund Scheme to stabilise domestic cotton price.
- Your views on China plus one theme and how Indian companies can benefit from this
With US and European countries now eyeing other Asian countries to meet their demands, this policy could be a blessing in disguise for India. India is the second-largest denim producer after China. China’s, now redundant, ‘ZERO-COVID’ policy had created disruption in global supply chain. This disruption, coupled with the West’s China plus one policy is an opportunity for Indian textile industry to increase its penetration in US and European markets through increase in exports.
- What does the future look like for denim exports considering the impact of a volatile economy and consequences of events like the Ukraine-Russia war/ Turkey-Syria earthquake?
Barely recovering from the pandemic, the global industries were once again hit by uncertainties of socio-economic upheaval from the Russia-Ukraine war and crisis that followed. From Turkey-Syria earthquake to Ukraine-Russia war the geopolitical situations of western part of globe has been changed. And the inflationary pressures building on the major part of globe has created pressures on consumption because of which exports are seeing pressure on demand side.
- Sustainability and emerging recycled denim market
Today’s consumer is well-informed and environment conscious. There is a growing demand for sustainable and environment-friendly fabric. The real challenge for the domestic manufacturers is to adopt new technologies, use sustainable raw materials while making sure that the final product is somewhat affordable. The recycled denim market is still at the nascent stage. R&D and investments are required to further develop the sustainable and recycled denim market.