Problems faced by the Indian denim industry

21 Mar 2024

Introduction

The Indian denim industry challenges is performing tremendously, both globally and domestically. The CAGR ( Compound Annual Growth Rate) of the Indian denim market stands at 8-9%, which is higher than the global CAGR. But despite all that, the Indian denim industry is facing a fair number of problems that need to be addressed. If corrective measures are taken, this industry could thrive and grow further. The denim industry in India is the second largest in the world, this needs to be protected and sustained for a longer period of time.

Indian denim industry challenges

The problems faced by the Denim Manufacturers and their solutions

1.Competition for local denim manufacturers

There is stiff competition within the domestic industry and also with the international. India faces heavy competition from China, Bangladesh and Vietnam due to their production costs being low and having structured manufacturing capabilities. This affects the Indian market share which calls for the domestic industry to be more competitive in innovation, price and quality. There is a need for a change in the way the industry operates and the approach they adopt. Starting with focusing on making high quality denim products that can compete with their international rivals. Research and development for new innovations in design, finishes and technologies could help to increase our standards to be on par with the current competition. We could also create a system of vertical integration which could control the entire denim process from cotton farming to final product manufacturing. This leads to reduction of costs and the quality of the product is highly maintained.

2.Raw material costs

When it comes to denim raw materials, the major material is cotton. The fluctuation of cotton prices affect the final denim product price. In India, the domestic prices of cotton varies due to factors such as weather conditions, pest infestations and disease outbreak could lead to a bad harvest. Then due to cotton being a globally traded commodity, the local markets get affected by its volatility. Along with that international trade and tariffs could affect the import and export price of cotton. There is a need to develop efficient storage and warehousing facilities which helps manage the timing of cotton sales. Then we need to provide farmers with information and forecasts about cotton market conditions and price. This could help the farmer to be informed and decide when to sell his/her cotton produce. Governments can be involved in protecting the cotton farmers by implementing policies to tackle price volatility. They could provide price stabilization schemes, input cost support and subsidies. This could help the farmers to sell at the right price.

3.Environmental concerns

It is often seen that denim production has a negative impact on the environment. It takes a considerable amount of water, chemicals and energy to produce denim. This leads to environmental destruction and depletion of water based resources, toxification of soil due to chemical waste discharge and waste of energy. This calls for a need for sustainable manufacturing practices. Sustainable raw materials such as organic cotton or recycled denim could be used as an alternative for the existing ones which will reduce environmental footprint. For reducing water consumption during the manufacturing, laser finishing and ozone treatment could be used. Implementation of a closed-looped water recycling system could minimize wastewater discharge and prevent pollution. For the denim finishing and dyeing processes, eco-friendly and non-toxic chemicals could be used instead of dangerous chemicals which are harmful to the environment. To get ahead in the pursuit of being sustainable, one should get relevant certifications such as Global Organic Textile Standard (GOTS) or OEKO-TEX which validates your commitment towards environmental sustenance through your responsible production practices. 

4.Technology & Automation for small manufacturers

Small denim manufacturers lack in  technology and automation as compared to large size manufacturing companies which have standardized technology and automation. This puts the small manufacturers at a disadvantage as they have to hire more laborers which increases the labor costs and also unavailability of labor could affect the production process. This situation lowers efficiency which causes less production capacity, longer delivery time on order and difficulties in handling the demand. Small manufacturing industries have a limited scale in the production output which can’t compete with the automated facilities of large manufacturing units. There is a need for the small denim manufacturers to use technology and automation in the production process. With government support, the small denim manufacturers could upgrade to new technology. Initiatives such as tax breaks, financial incentives or subsidies for investing in automation could empower them. These denim manufacturers could be provided access to grants and affordable loans to invest in automations by the government. When the automations are put in, there is a need for skilled labor. Current labor could be trained and educated for running the automations and machinery. They could also lease the automation and machinery equipment which will save more money and could also get upgrades when the technology gets updated.

5.Brand competition for the new denim manufacturers

It’s tough for new denim manufacturers to enter the denim industry considering the fact that it’s an overcrowded market which makes it a challenging situation for the new ones to be unique and acquire a foothold in the market share. Then there is price-sensitivity among the Indian consumers which puts pressure on the brands to make their denim products affordable. This leads to the reduction of profit margin and hence prevents investing in innovation and marketing. Counterfeiting is a major issue which affects the original brand’s sales and tarnishes their reputation. When it comes to brand marketing, the Indian denim market is saturated with numerous brands, hence it’s hard to sustain brand loyalty. To be ahead of brand competition, one needs to take a few measures. Starting with research & development in product development and innovation of denim products. There needs to be unique designs and features. Along with that, one needs to maximize its collaboration with technology to create functional properties in the denim products. Then there is a new trend which is out there, i.e.,sustainable and eco-friendly practices. One could find an opportunity to innovate in sustainable practices and stand out in the competition. Expanding this approach, one should be a part of eco-friendly supply chains which would attract environmentally conscious customers. Then it should be made mandatory that the quality of the denim output matches international standards and is maintained that way. More importantly a denim manufacturing company should invest in marketing and branding strategies to elevate the company’s image. For reaching out to a larger audience and engagement with consumers, one should make the best use of social media and digital marketing. One could also have programs for repeat customers in which they get rewards for buying. This maintains loyalty among customers and hence expands its consumer base.

Enter “Denim Show

Every year alongside the Gartex Texprocess India, “Denim Show” is held. It consists of exhibitors from all over the country showcasing innovations in the denim manufacturing industry. It helps find out what’s new and trending. Here, one can check out competitors and compare brands. One could find access to a diverse range of raw material suppliers which gives a chance for the buyer to choose the most suitable ones for their requirements. Exhibitors also bring new innovations in Sustainable practices and eco-friendly technology which is the new normal, as the current times call for that. One can find a wide range of new denim manufacturing technologies. If you want to become a part of the Indian denim industry, this exhibition is the perfect beginning to find a direction towards growth.

Conclusion

There may be a certain number of problems for the denim manufacturing industry but overcoming them when all the types of people in the process are involved from the farmer to the manufacturer to the supplier to the retailer to the customer. People from all these steps could cooperate and make an economy out of it, eventually making the Indian denim manufacturing industry a dominant textile giant in the world.

 

 

 

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