AHMEDABAD: Indian denim fabric makers like Arvind Ltd, Aarvee Denims & Exports Ltd, and Soma Textiles are running full steam to fulfill orders that are getting diverted from China owing to price competitiveness. India emerged as a preferred sourcing destination after labour costs in China went up and Yuan became stronger in late 2011.
"Chinese fabric costs 10-15 cents more than India's now. Buyers are more than happy to come to India," says Ashish Shah, MD, Aarvee Denims and Exports Ltd. Denim fabric produced out of Chinese factories now costs $2.60-2.65 against India's $2.50 per metre. China is no more competitive and hence, India becomes lucrative for international buyers. Aarvee is running its 84 mm capacity denim plant full steam.
"Even if India is able to get 5% of China's business, it will be a big leap for the industry," Shah says. The company has had in the recent past attended to clients like VF Corporation and Walmart and exports to converters in Latin America, Egypt, Sri Lanka and Bangladesh.
With Bangladesh turning a top apparel destination for European and American brands, India will have to fulfill increasing number of orders for denim fabric that would get stitiched in Bangladesh, adds PR Roy, director fibre2fashion.com.
European brand S Oliver, for instance, has diverted its China orders to Bangladesh. "This has converted to substantial increased business for us (fabric for majority of the garments stiched in Bangladesh is sourced from India)," says Subir Mukherjee, head (marketing and commercial) at Arvind whose clients include walmart, GAP, Levis. Arvind Ltd is going full steam production on its 110 mm capacity since March.
China, India and Pakistan/Turkey are the largest manufacturers of denim fabric worldwide. China used to produce 3 billion metres until near future. Its current production stands at 1.5 bn-m. India on the other hand, stands on a milestone of achieveing a capacity of 1 billion in 2013. Turkey and Pakistan produce about 500 million each.
Denim tracker Sandeep Agarwal says China has by far dominated the global denim marketplace, exporting 50% of its 1.5 billion metre denim produced. India that so far exported 20% of its near 800 million metre production, would now see China's part of business come to it.
"India is suddenly in the global platform by default. Now that it has become price competitive, buyers will find it more lucrative than China," notes Rajiv Dayal, MD of Mafatlal Denim. Raymong UCO Denim Pvt Ltd did not see any order getting diverted from China.
Its Group CEO SK Gupta said Bangladesh and Pakistan would have benefitted from China's problems rather that India. Sharad Jaipuria, CMD of Ginni International Ltd, who heads the Denim Manufacturers Association added that with Pakistan costing 20 cents cheaper than India, buyers would look at Pakistan for sourcing denim fabrics.
Although Pakistan would be as competitive as India, geopolitical instability in the region keeps off buyers, Dayal says. India is probably the only country that has grown in denim fabric even as others stagnated. Indian denim manufacturers have steadily increased capacities from 300-400 million metres to 800 million metres in just five years, Sandeep Agarwal says. Soon the capacities should stand at 1 billion-metre, he adds.
Apart from addressing fashion and lifestyle needs of high-end brands, Indian denim players have understood the requirement of retailers like Walmart who cater to the mass market. Denim fabrics from India have hence, found a space in US retail shelves at $10-20 per piece, adds Dayal who supplies fabric to VF Corporation, M&S, Zara and Pepe. UK retailer M&S and Bharti Walmart refused to take ET's questions on China.
Abhijit Gohil, president of Soma Textiles and Industries Ltd. says the company will increase its capacity by 10 million metre in next six months to stand at 24 million metre to tap the opportunity arrising out of China's problems and a growing domestic market. The company has its hands full of orders from denim garmenters in Bangladesh, Sri Lanka and Turkey. It is a fabric supplier to M&S.