Denim May Outperform Overall Apparel Growth

 Even while apparel exports and domestic markets are expected to see subdued growth, the denim segment is likely to grow at a faster rate.

According to industry experts, the denim industry is growing at a compounded annual growth rate (CAGR) of 13-15% in a year when overall apparel growth rate is being pegged at a lackadaisical 3-5% this fiscal, down from 12-15% for the past couple of years.

Denim makes up 35% of total textile exports from India and is expected to rise to 45% of total exports by 2020; production is also expected to increase to 1.5 billion metres by 2020.

Meanwhile, the Indian denim industry is gradually looking to increase its share of exports, which currently lags behind at 35% compared to a domestic market of 65% of total production.

"Denim is witnessing one of the fastest growth rates as an apparel fabric segment, up by 500 million metres from 700 million metres in 2010 to 1.2 billion in 2015. Yet, there is a gap of another 300 million metres in India if the denim industry needs to tap its full export potential," says P R Roy, chairman of Diagonal Consulting (India).
Read more from our special coverage on "DENIM JEANS"

As an apparel segment, denim's growth has been more in the domestic market than in the exports. While India has been one of the major global suppliers of denim fabrics, the domestic market still falls behind other competing nations in terms of denim apparel such as jeans.

Also, while most of the global brands outsource denim apparel work to Indian players, much of it is meant for the domestic market and not for exports.

"While the total denim capacity in the country is about 1.2 billion metres per annum, the utilisation is at around 900 million metres per annum, of which 250 million metres would be exports. However, denim apparel exports would roughly form around 50-60 million," says Prashant Agarwal, joint managing director of Wazir Advisors, a retail and management consulting firm.

Globally, the denim jeans market is projected to grow at 8%, up from $55 billion in 2015 to $59 billion in 2021. While the projected growth rate in Asia including India is around 12%, that for Latin America, North America and Europe is expected to be around 15%, 10% and 4%, respectively in next six years.

 

Source :business-standard.com