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Denim orders rise for india as china, us cut capacities

Denim orders rise for india as china, us cut capacities Source:
Date: 13-04-2012
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With China and US significantly cutting their denim capacity over last year, Indian denim makers’ business has seen a surge lately. While the domestic market has been growing by 10 per cent, the foreign order books have risen between 10 per cent and 15 per cent, say experts.

According to P R Roy, director of Fibre2fashion and former group chief executive (textiles) of Arvind Mills Ltd, China cut its annual denim capacities from three billion metres to 2.5 billion metres over last year. “While the US has been reducing its denim capacities for some time, China has cut its in the last one year. This has come as a surprise to the industry. As a result, Indian denim makers’ order books may have risen 10-15 per cent over this period,” he says.

The Indian denim industry has, on its part, added about 100 million metres of capacity over a year. This has led to India being able to absorb the increased orders from within and outside the country.

“There has been an improvement in our export orders. Sourcing from China has been shifting to India. More, we have been benefitting from appreciation in the value of the dollar. However, our focus on exports is only 20 per cent at present,” says Deepak Chiripal, chief executive officer of Ahmedabad-based Nandan Exim Ltd. At a turnover of Rs 600 crore, the company manufactures 20 million metres of denim fabric a year. For Nandan, orders have risen from the US as well as West Asian regions over last one year. Moreover, Chinese denim makers have also been growing uncompetitive, thanks to the appreciation in the value of the yuan and high input costs.

“India’s manufacturing capacity has been growing at 10 per cent a year. On the contrary, capacities have slow in China due to a stronger yuan, high power and labour costs. Plus, China has to buy cotton from outside. Since Chinese denim makers are becoming uncompetitive, orders are shifting in favour of India, Bangladesh and Pakistan,” says Mafatlal Denim managing director Rajiv Dayal.

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