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India’s denim market grows strong, to witness 15 per cent growth y-o-y

"What started as path breaking apparel category for India three decades ago, the denim charm is here to stay. It has been one of the most essential wardrobe element and a fashion statement. Globally, the denim industry is slated to grow at a CAGR of over 6.5 per cent during 2015-20, with market value expected to increase from $113 billion to $153 billion."

 

Indias denim market grows strong to witness 15 per cent growth y-o- y

What started as path breaking apparel category for India three decades ago, the denim charm is here to stay. It has been one of the most essential wardrobe element and a fashion statement. Globally, the denim industry is slated to grow at a CAGR of over 6.5 per cent during 2015-20, with market value expected to increase from $113 billion to $153 billion.

Indias denim market grows strong to witness 15 per cent

Amid an apparent growth slowdown, the denim market is standing tall with consistent CAGR of 15 -18 per cent per year, registering the fastest growth in apparels. The installed capacity of almost 1,200 million meters is expected to increase to 2,000 million meters in next three to four years owing to the huge demand for the fabric. While India’s share in the overall denim manufacturing capacities is around 10 per cent, at present its share in the global jeans trade works out to 2.5 per cent. India, with its resource advantage of all types of cottons and MMF fibres, and thanks to the introduction of state-of-the-art technology, manufacturing plants, and the entry of top global brands, surely has the potential to grab a higher share in the global market.

Demand dynamics

India has 32 denim fabric mills with manufacturing capacity ranging from 10 MMPA to 110 MMPA. Though the market is dominated by men’s wear, other segments are also catching up fast. Growing demand in Tier II, III cities accounted for by unbranded denims. However, as market penetration increases and disposable incomes increase in semi-urban and rural areas, demand will shift towards premium quality products, thereby positing branded denims strongly across the country. Meanwhile, yarn manufacturers are innovating with blended cotton yarn and biodegradable yarn made from wood pulp to attribute unique properties like softness, flexibility, and comfort in denim wear.

Aalmost 85 per cent of the denim market is dominated by men, with 10 per cent contribution from women and the kids segment contributing about 5 per cent of the market. The major factors driving growth are: Variety as denim is made not just into jeans but also other items of clothing and accessories; purpose as denim denim serves almost all purposes. It comes in a range of colours and can be worn as formalwear as well as casual wear; convenience as denim wear is comfortable, low maintenance, and long lasting; change tastes among Indian women as the modern Indian woman now wears denim in daily life, thereby increasing demand for the product exponentially; e-commerce as demand is fuelled by the unprecedented increase in the number of shopping malls and rise of online shopping portals; denim is available at various price points as per demand dynamics. Prices depend on factors like quality of material, texture, comfort, cut, and wash; Global demand for denim is growing at a CAGR of around 6 per cent. With an abundance of raw materials, availability of trained manpower, and state-of-the-art technology, India has the potential to become a major denim exporter globally; the denim market is constantly redefining and reinventing itself with new designs, washes, cuts, and embellishments, which keep the masses interested and demand high.

Denim exports a money spinner

Besides the tremendous domestic potential, the Indian denim industry is also looking at expanding its share of exports pushing it up from the current 35 per cent. This can be augmented with the availability of cotton in abundance in the country. Experts believe a dedicated and focussed approach towards increasing export revenues can boost the otherwise lower share of exports in the total revenues. Considering the insignificant share that India commands in international trade of textiles and clothing, any new addition in denim manufacturing capacities is a welcome move. This increase in capacity along with encouraging textile policies and favourable exchange rate movements could help India achieve a significant export growth. While additional capacity is added to the existing manufacturing by 2020, the domestic and exports ratio is likely to change from 65:35 to 55:45.

The top 10 towns that account for less than 10 per cent of Indian population account for almost 50 per cent of domestic denim consumption. With almost 35 per cent of sales from the organised sector and 40 per cent from the branded segment, the denim trend is expected to penetrate the market further and register significant growth in the near future.

 
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