Gurudas Aras
Strategic Advisor & Independent Director Former Director at A.T.E Group
Denim will always remain in vogue
At the Gartex Texprocess India, a comprehensive tradeshow on garment & textile machinery, held in Mumbai from May 12-14, 2022, Fibre2Fashion caught up with Gurudas Aras, Strategic Advisor & Independent Director, and Former Director at A.T.E Group, to chat on cotton, denim and government policy.
Cotton prices are currently at a record high both in domestic and international markets. How is this affecting the Indian denim industry?
The record high cotton prices are not only affecting the denim sector, but the entire textile industry very badly. Post pandemic the Indian textile industry really started looking up and it was felt that India will fill the space which is being vacated by China. Especially in textiles, people really started getting a lot of export orders. However, in the last 3-4 months, the way cotton prices have increased and now crossed the benchmark figure of 1 lakh rupees a candy of 356 kg, it’s going to be very tough for the textile industry.
The high price of cotton is forcing spinners to increase their prices. For fabric makers, it is becoming very difficult to buy yarn at those prices because the fabric prices have not gone up in that proportion. And the worst part is for exporters who have committed orders, but the input costs have gone up. So, many of their orders are being executed at a loss now. Overall, it’s not a good situation and I personally believe that this is going to continue for quite some time. The government has allowed to import cotton from abroad, but if you see the international prices and the freight costs, which have gone up tremendously, the landed cost is in fact little more than the domestic cotton prices.
For denim, since it is mainly cotton-fed, it is going to be tough as well. Actually, the situation is very difficult, and it has become a question of survival for the industry. But this phase shall also pass, maybe in four months or more.
What is the domestic vs export sales proportion? Will it remain the same in future?
As far as denim is concerned, the domestic industry is growing very fast. In exports, there is a huge competition in denim, especially from countries like Bangladesh and Vietnam. The manufacturing plants in Bangladesh are far better than Indian plants because Bangladesh entered this field much later than India. For finishing, they went for the best technology in the world, mainly from Europe. They are also following the best practices in manufacturing. Some of the plants have very good housekeeping too. Therefore, Bangladesh produces very good denim quality, which is even better than Indian manufacturers.
If you see the export market, India is not in the top bracket of denim value chain. It is in the mid and lower levels. If you see even the composition of Indian denim industry, there are handful of very good quality denim manufacturers, but there are plenty of producers who are not of very good quality. It is because there is a huge market in India, where you can get a jeans for even ₹300. Many mid- and small-scale manufacturers are still focused on producing low quality, but like a pyramid this market is growing much faster. While the domestic market will continue to grow much faster, in export, India should now get into high valued areas like Arvind or Raymond has done. But, for those who are in the mid and lower levels, there is going to be tremendous competition from other countries.
What are your expectations from the present government in terms of policy support for making denim industry more competitive?
This is the best time for the businesspeople or the industry because the government is extending full support. The Indian textiles ministry is extremely active as one can see from the recent decisions taken by the government like PLI scheme and PM MITRA. The government is quite clear that the textile industry holds a big promise as it has the highest potential for employment and exports. Therefore, for textiles there cannot be a better time than the present barring the fact that the cotton prices are becoming a really big hurdle now. But from long-term perspective, this is the best time for the industry, as the government is fully supportive.
India did not have free trade agreements (FTAs) nor was it a part of mini trading blocs. So, our products were always expensive compared to the competing countries like Bangladesh, Pakistan, Sri Lanka, Vietnam, etc. But now, the government has singed two FTAs. The FTA with UAE is especially important as it opens a gateway to Europe. China always used to make Dubai as gateway to enter the market in Europe, and now India has the same access.
The second FTA is with Australia, and I have learned that the government is very close to finalising FTAs with the European Union and Canada. These FTAs will provide a big access for our goods because they will bring parity in duty treatment. Today, when exporting directly to the European Union, there is about nine per cent import duty as an example of yarn, whereas our competing countries attract less or no duty putting us at a disadvantage. The FTAs are going to help a lot to the textile industry.
The present government is very proactive. It is giving a lot of importance to the textile industry, and denim definitely is part of it. So, exports might increase in the next two years if we get competitive access to some of those markets where so far we never succeeded compared to our competing countries.
Indigo dyes are integral to making denims. With concerns over sustainability rising every day, do you foresee more use of eco-friendly dyes? By when can we expect all denim production to go 100 per cent eco-friendly?
There is no option but to move towards sustainability. Not only in denims, but in every part of life sustainability will become a rule now. Denims particularly have to go sustainable as many of the dyes used in the industry are harmful. Another problem is treating the affluents. Further, water is consumed in a big quantity while finishing of denims. So, the sooner denim manufacturers move to eco dyes, the better. Even buyers are now becoming very particular to see whether the buyer is following sustainability practices or not. Unless the industry changes very fast, it will be left behind. The process has to change and even the materials which go into production have to be also environment friendly. In fact, this needs to be done across the value chain. Fortunately, some textile producers have realised this, and have started introducing sustainability as an important theme in manufacturing. Evaluation is happening; however, it is still at an early stage and there is a very long way to go.
At what rate is the denim market growing in India?
Some of the growth drivers of Indian textile industry are athletic wear, sportswear, denim, home textiles and womenswear. Now denim has not remained just a fashion item but has become a necessity in many cases as after the pandemic, people have switched over to more and more of unconventional dressing. They have started wearing tracksuits and other athleisure clothing. Now, many companies have come to understand this and are allowing their staff to wear denim and T-shirts at workplaces. So, denim market will grow.
Secondly, India has very highly growing younger population. During earlier times, people used to have only 1-2 jeans in their wardrobe, but now people have multiple jeans. Of course, denim also has undergone tremendous change over the years and it’s not a traditional conventional denim anymore. It has a lot of Lycra content; plus, various different fibres are mixed with cotton fibres. In addition, a lot of work has been done on finishing side of the denim. So, denim is one fabric which will definitely be growing at least at 5 to 10 per cent CAGR irrespective of whether the textile industry grows or not.
The applications of denim have also increased considerably. It is no more used only for a trouser, a shirt or even a T-shirt. There are denim yarns with Lycra which are used in fashion accessories, belts, ladies’ bags, shoes, etc. Therefore, with the increase in applications, denim will never go out of fashion. In a country like India where there is a huge young population, denim will always remain in vogue.
Published on: 26/05/2022
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.
