Denim fabric majors in India are facing a fall in revenues. Slowing demand in major export markets following the Russia-Ukraine war and relatively muted domestic demand coupled with volatility in cotton prices have eroded their profits.

The dent in export markets is hitting the industry hard. Units heavily dependent on exports tend to be affected as the denim demand has nosedived since the war began. Cotton price fluctuations are another key reason for the declining demand for denim fabric. Since Covid denim fabric prices have gone up by an estimated 30 per cent due to a hike in cotton prices. So whenever prices rise garment manufacturers stop procuring fabrics from denim mills as passing on costs isn’t possible.

Soon after the lockdown, when domestic demand took a hit due to consequent waves of Covid and subdued discretionary spending, exports provided a cushion to many denim majors whose revenues thrived. But higher cotton prices have affected denim manufacturers’ competitiveness. When demand is low, competitive prices help companies gain orders.

However, with Indian cotton remaining expensive, it is difficult for Indian denim companies to compete against Chinese counterparts as cost of production increases. However, in the fourth quarter, as cotton prices have begun stabilizing, denim majors are optimistic about a revival in domestic demand.