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Denim makers expect 15% growth in export orders

Source : BUSINESS_STANDARD
Last Updated: Wed, Nov 07, 2012 04:10 hrs

While domestic denim market may be growing by 10 per cent, cut in denim production by China and the US has propelled export order books by 15-20 per cent for Indian players.

"It has been sometime since China and the US have been cutting down their denim production capacity. In the wake of this, we have seen competition from Pakistan and Bangladesh. Yet, we are witnessing a 15 per cent rise in foreign order books with more still coming in," says Deepak Chiripal, chief executive officer of Ahmedabad-based Nandan Exim, the denim arm of textile conglomerate Chiripal Group.

Similarly, Aarvee Denims and Exports Limited, which exports 25-27 per cent of its total denim produce, is also witnessing about 10-12 per cent growth in export orders. Industry experts estimate that China and US have cut down denim capacity by roughly 500 million metres in last one year. Add to that, Indian denim industry has seen massive expansion in recent times.

According to Rajesh Dudeja, founder, Denim Club of India, from 700-odd million metres per annum last year, the industry could have added close to 300 million metres with more being added up continually.

However, Dudeja offers a rationale for dip in denim production in China. "It has been learnt that there has been a change in the Chinese government's internal policy. They believe producing fabric is not as profitable as producing textile machinery that makes fabric. Plus, whatever denim is produced, they want to supply it to their own people in the domestic market," he adds.

For Nandan Exim, orders have risen from the US as well as Middle East regions in last one year.

Moreover, Chinese denim makers have also been growing uncompetitive day-by-day, thanks to Yuan appreciation and high input costs.

Meanwhile, according to Utsav Pandwar, chief financial officer of Aarvee Denims and Exports Limited, "capacities have slowed down in China due to stronger Yuan, high power and labour costs.

Further, China has to buy cotton from outside unlike India, wherein Chinese denim makers are becoming uncompetitive and hence orders are shifting in favour of India, Bangladesh and Pakistan.




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