Indian Mills Give Insiders’ Take on Domestic Denim Market
With a growing population and middle class, India’s apparel market was on track to quickly rise in the next few years. But with disruptions due to Covid-19, will the nation maintain its trajectory?
A 2019 report from Business of Fashion and McKinsey named India’s ascent as one of the top 10 trends for the year in fashion. The apparel category in the nation is projected to grow 8 percent each year through 2022, rising to a total market value of $59.3 billion. Domestic denim production and consumption specifically have taken off over the last decade, increasing at a compound annual growth rate of 15 percent.
The pandemic has challenged the fashion sector in the nation. During a Carved in Blue webinar on Oct. 20, executives from three Indian mills shared what they are seeing on the ground.
India entered lockdown in March, early compared to some other parts of the globe. After losing at least one full season, things are starting to return to normal. Aamir Akhtar, CEO of Arvind, noted that due to brands holding onto spring inventory and repurposing it, they weren’t buying. Even though consumers’ purchasing has slowed, the sheer size of India’s 1.2 billion population means that merchandise is now being cleared. And with inventories drying up, retailers are looking to replenish with new orders.
However, capacity, which has been ramping up in denim in recent years, is still underutilized. Aditya Goyal, CEO and managing director of Anuhba Industries, believes that over the next six months, most Indian mills won’t surpass a capacity of 45 to 55 percent.
Beyond population size, there are other aspects that have helped India absorb the blow of the crisis.
“The Indian domestic market is a very different market compared to all of the markets globally,” said Goyal. “The products which get consumed in the Indian domestic market would not be getting consumed in such huge quantities elsewhere in the world. So in that manner, it does isolate the Indian mills from a certain amount of global shock.”
A bright spot in demand has been the rural areas, where denim is being purchased as a workwear essential. These individuals are also faring better since they are able to sell their goods and they have received support from the government. Meanwhile, cities are taking longer to bounce back and make denim purchases since workers are unemployed and businesses are struggling. Because of this, commoditized denim is rebounding at a greater rate than fashion denim. Panelists are also seeing more of a market for value denim as demand returns.
“The sense is that people will want more value for money,” said Akhtar. “They will want product that ends up delivering more.”
During the pandemic, consumers’ stay-at-home lifestyles have caused denim sales to take a hit, with import values down 30 percent from last year. But mills are optimistic about the future of the fabric in the face of the threat of knitwear.
“[Denim] will come back for sure,” said Subir Mukherjee, business head at Bhaskar. “Denim is not challenged by anything except itself.”
Watch the full webinar below to hear the panelists’ thoughts on sustainability, how Covid is impacting their companies’ investments and the outlook for India’s denim market.