The Indian Denim Market

Denim Article

The Indian Denim Market is rapidly growing at CAGR of around 15 %. The main drivers for the growth are the favorable young demographic profile (approximate 50% population of India is in between 15-35 years), movement towards casual comfortable dressing, growth in the women / children segment, 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 future of Indian Denim Industry is in “Product Intelligence” in the words of  Mr. Amit Gugnani, SVP, Fashion (Textile & Apparel), Technopak.

Denim Article 1


FASHION ERA: Indian Denim market, promising future ahead?

Mr. Amit Gugnani: Denim is a promising category accounting for ~5% of the total Indian apparel market. Its current worth is INR 15,530 Cr.

FASHION ERA: Is the Denim consumption increasing day by day in India?

Mr. Amit Gugnani: Indian denim market is projected to grow at a CAGR of 15% until 2024.

Aspirational youth in the age bracket of 15-29 years that constitutes ~1/4th of the total Indian population. They have higher purchasing power than previous generations and prefer casual clothing including denims.
Wide range of consumer groups across rural and urban areas, age brackets and income segments that consider denim the apparel of choice owing to comfort, style, and versatility.
Brandization and premiumization of denim especially in metros and mini metros as consumers become aspirational and quality conscious, and hence drive value growth.

FASHION ERA: In terms of trends what is the Denim Demand?

Mr. Amit Gugnani: Select trends are:
Majority of denim manufacturers focus on the Indian market, and will continue to do so as long as there remains high value realization on the domestic front than in exports.
Entry of new denim fabric manufacturers in recent times, which is expected to intensify price competition.

Cotton to remain the fibre of choice for denim apparel. In blended denim fabrics, polyester is being used as weft threads. Stretch denim is in high demand as its comfort and fit characteristics gain popularity. Currently stretch denim fabric contributes to 2/3rd of India’s sales.
Denim jeans are no longer limited to traditional blue and black colours. Green, red, yellow etc. are finding acceptance with youth being early adopters.

FASHION ERA: What’s new @ Denim? Your innovative role in exploring and developing new sustainable production techniques to make the leading way.

Mr. Amit Gugnani: Today different brands and retailers are bringing innovations such as recycled denim, denim made of organic cotton etc. to the market. While this segment is relatively small, it is fast growing and is expected to find greater acceptance in future especially since consumers are becoming conscious of what they purchase and prefer environmentally friendly products.

FASHION ERA: In your view, what growth pattern is the Denim Industry to follow?

Mr. Amit Gugnani: Growing at a CAGR of 15% over the next 10 years, the Indian denim market is expected to reach INR 62,810 Cr by 2024 from its current INR 15,530 Cr. While the market heavily skews towards men’s market (85% of the market), the women’s and kid’s market (constituting 9% and 6% of the market respectively) are expected to grow at a higher pace than men’s owing to smaller base and increasing focus of brands and retailers on these segments.
Faster growth is also expected for the organized and branded segment of denim in India. Currently the unbranded segment dominates with ~60% market share and competes primarily on price. This balance will shift in future driven by not just branded acceptance in urban area, but also an increasing branded share in rural areas as aspirational consumers seek for better quality denim and brand image.

FASHION ERA: Your comment on moves of global denim?

Mr. Amit Gugnani: There are a large number of established denim-focussed brands in the West, which are now exploring developing markets to further increase their market share. Denim products with high-end finishes and innovative product designs are also becoming mainstream and gaining popularity across countries.

FASHION ERA: Denim has undergone a massive transformation over the last two decades. Today all kinds of fibers, dyeing techniques, weaves, finishes etc are used . How much future scope do you think is left to take these developments further?

Mr. Amit Gugnani: While there have been significant developments over the last two decades, denim apparel production in India is still largely fragmented with only 20-30% of denim apparel manufactured in organized units. As this pattern changes, innovative and up-to-date manufacturing techniques will become even more prevalent.
Awareness of different denim finishes and washes in Indian semi-urban and rural markets is low. Hence, there is a huge scope of improvement in increasing awareness of these washes and finishes in these places, and delivering these products at a reasonable price range for high adoption.

FASHION ERA: Do you see India becoming even more important player in the world denim industry considering China slowly reducing their capacities? Which country is your highest consumer of denim apparel ?

Mr. Amit Gugnani: India will become an even more important player in future. Since denim is produced primarily from cotton and India is expected to overcome China as the single largest producer of cotton in the world, this will further improve India’s rank in production capacity relative to China and other nations (which currently stands at >1,000 Mn meters of denim fabric produced per year in India).
During late 70’s, it was observed that in Europe and United States, people wore a particular type of bottom wear, Jeans which was not produced in India. During 86-87, Denim production technology was imported to India. Dramatic change in the entire denim fashion came in the last 15 years, when a new set of specialized yarns were introduced. Then came new colours, toppings, over dyeing and coating. On the whole, a new range of denims have come into the market. Dry and wet washes with laser and ozone technique on ready Jeans changed the age old classical Blue Denim of fourteen and half ounce of Denim business of fashion.

India presently lacks in denim product development and innovation, which once practiced widely will positively impact total denim market size. There is also a need to develop larger portfolio of denim garments and accessories in addition to denim jeans including shorts, shirts, bags, dresses, accessories etc. To foster wider applications, the weight (gsm) range of available denim fabric can be broadened.
There is scope of improvement and opportunity in accurate processing and value addition via fashion-led processes and finishes. Establishment of high quality processing and washing units can help improve the quality of finishes and colours, thus driving demand.

The prudence with which various stakeholders of the denim eco-system identify and collectively address key issues and challenges will potentially determine the future of Indian denim.
Processing industry in India lacks in world class denim processing capabilities and there is huge scope of improvement in denim washing and chemical finishing. The government can provide capital support in setting up high-end denim washing units, and in providing skilled manpower who can work in these updated processing units.

Looking at per capita denim jeans consumption per year, India stands at 0.3, China at 0.6, while Europe and USA are at 2.0 each. This low per capita jeans consumption suggests the huge scope for denim growth in the domestic market. However, India needs to build its denim garment manufacturing as well as processing capability to cater to the exports market of the developed world.
The emergence of semi-urban clusters, areas having less number of farming communities, across the country has opened a plethora of opportunities for regional brands and retailers. A typical denim consumer of the semi-urban cluster demonstrates a blend of the characteristics of urban and rural consumers; like an urban consumer he or she shows awareness of brand and product quality and like a rural consumer pricing and affordability plays a crucial role in his or her purchase decisions. The regional brands have focusing to cater to these typical requirements of the semi-urban consumers. However presence of lots of unbranded players in such markets it a market of intense competition to many national level brands.

Rural demand is expected to outstrip urban demand for RMG, as the rural market remains significantly under-penetrated.India’s exports of RMG are expected to grow faster than domestic market, and is estimated to register CAGR of six to seven percent over 2013-18. Growing demand for RMG, in both domestic and export markets, is expected to boost the domestic denim fabric industry.
In India unbranded denim products dominate the market with around 60 percent share of the market. The share of brands in denim market stands at 40 percent. Most of the unbranded players operate on the lower price segment of the market where awareness of quality of fabric, finishing and washes, design and fit are relatively low.

Currently, the jeans market in India is under penetrated – per capita consumption of jeans is 0.3 pairs per year, significantly lower than two to three pairs per year in developed nations such as the US and the EU. This represents a very significant growth potential for the industry.

India has an integrated value chain for denim products starting from fibre to retail. Denim is primarily produced from cotton and India is expected to overcome China as the single largest producer of cotton the world in 2014. The country is the second largest producer of cotton yarn. The denim fabric production capacity of India is more than 1,000 million meters per year, and India is still witnessing entrance of more denim fabric manufacturers in the industry.

Denim fabric production in India is concentrated in the western and northern parts of the country with more than 45 percent contribution coming from Gujarat alone where Ahmedabad is the production hub.
Denim apparel production in India remains a fragmented industry where only 20-30 percent of denim apparel is manufactured in the organised units. The denim apparel production activities are concentrated in Delhi and NCR, Mumbai, Bangalore and Ahmedabad.

The Indian denim fabric industry is cyclical in nature and is characterised by periods of excess capacity followed by narrowing demand-supply gap. The incubation period for denim manufacturing units is small. Thus, post a period of growing demand, a number of denim fabric manufacturers put up additional capacity to meet future demand growth, which in turn leads to oversupply in the market.
Pricing depends on the term price of cotton, the type of fabrics and manufacturing unit and its brand value. Rajan Gupta, National Sales Head, KG Denim explains, “Good denim qualities in 100 percent rigid stuffs, flat finish in 11.5-12.5oz, fall in the range of Rs. 140 to Rs. 160 in slubs/ xhatch/fi ne slubs, if we cite the price to distributors, who in turn supply to the ultimate cutters by adding their mark ups based on credit terms settled. Stretch denim qualities prices for quality oriented products range from Rs. 185 to Rs. 225 in 11-12 oz in fine slubs, silky, etc. to distributors as cited for non-stretch they too are then marked up.”

Movements on the cotton price fronts is critical. The U.S. Department of Agriculture’s (USDA’s) fi rst world 2014-15 cotton projections anticipate that production will exceed consumption for the fifth consecutive season, with the potential for record global stocks to exceed 100 million bales.
World stocks have more than doubled between 2009-10 and 2013-14, mainly due to the cotton policies of China, which have supported world prices above market-clearing levels. China’s government now intends to reduce support levels; however, world stocks are unlikely to fall in 2014-15 as the adoption of new policies will be gradual and world production and consumption responses will lag changes in policy and prices. China’s stock level is expected to stabilize, and stocks held outside of China are likely to grow. USDA projects that lower China domestic support levels, higher stocks outside of China, and falling grain and oilseed prices could reduce the world cotton price to a five-year low. Latest data as per Crisil Research says that the cotton prices are expected to decline in 2014-15, averaging 110 per kg. This will push India’s cotton inventory to a six-year high of about three months. Cotton inventory will increase despite an expected two percent decline in production, as cotton will decline by a higher three-five percent; exports will decline due to sharp fall in China’s import demand, which is India’s largest export market for cotton.

The total denim fabric capacity worldwide if we sum the produce of the main 300 manufacturing units will be approx. 7.5 billion yards which is expected to touch 10.5 billion yards by the year 2021. The leading country in denim fabric production and supplies is definitely China having a capacity of approximately 2-2.5 billion yards per annum. China is joined by India, Pakistan, Bangladesh, Turkey, and Brazil as other major manufacturers.

Denim is still most popular in indigo blue. Now the range has extended to dark indigo blue, to sulphur bottom indigo, indigo bottom sulphur, sandwich shades with combinations of indigo and sulphur layers of dyeing and various combination shades like tinting and over dyeing in different colours, yellow and brown to name a few.

Coloured skinny jeans is one of the most prominent trends that is becoming popular. Bright and bold hues across the spectrum were worn by both men and women. Today denim trends are moving away from this and it’s all about the true blue again; trade shows definitely have indicated a preference for traditional colours. Deep indigo, grey and black denim will take a center stage.
Colours, structures and patterns are becoming cleaner and more muted. Glossy surface have disappeared completely. Fabric manufacturers have become more enthusiastic about backing materials and focus on making the reverse side of fabric attractive. For instance, laminates, are being printed or embossed by applying the structures to the outer layers.

Environmental and social awareness in society is on the rise. The implications for fashion to fall in line and stand accountable are clear. The fashion consumer is infact leading the change and votes in favour by purchase bills. Today the industry is looking towards positive environmental and social benefits through informed choices of materials and intelligent design. One emerging manifestation of responsible choice making is the surge in demand for organic denim. These organic denims are an eco-friendly range of classic pieces reinterpreted using ethical fabric choices. They are the tribute from the denim suppliers to care for the environment.Organic denim fabric is made with 100 percent organic cotton and free from chemical fertilizers, pesticides and insecticides. The entire production of the fabric adheres strictly to ecological standards: from spinning, dyeing to finishing of the denim. It involves non-toxic fiber processing, colouring agents and fabric treatments which ensures that the production of collection was environmental-friendly.

However, these days we can see the organic trend fluttering all over the denim world. Many leading suppliers take the green step adopting the idea and offering collections of organic denim.
Today, a lot of mills in India are experimenting with denim fabric. There has been innovations with blends produced with Khadi, Wool, Silk, Linen, etc. Certain mills have even innovated to blend and produce polyester denim. Also, experimental innovations are happening with banana fibre, etc.

Filed in: Processing Industries

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