The Indian denim sector has been growing at an average of 12 to 15 per cent a year over the last 10 years. India is the second largest producer of denim fabrics after China. Of India’s total denim production, nearly two-thirds is consumed by domestic markets. The installed capacity is around 1500 to 1600 million meters a year against a consumption market size of only 800 million meters for the domestic garment making segment, and another 200 to 250 million meters for exports. There seems to be a clear surplus of nearly 500 to 600 million meters at present, with the fear of an additional 100 million meters by the end of 2018.
Also, cheap imports of denim garments from Bangladesh and Sri Lanka have been a game spoiler for the domestic denim wear-making units. This has been the single most visible reason for the drop in capacity utilisation in the denim industry, by one third of capacity. In most standard denim mills of three indigo lines, one line presently stands closed. In effect, such a standard denim mill produces around 50,000 meters a day against the installed 75,000 meters a day. With a slowdown in demand from global garment making hubs, it is unlikely that India will be able to increase its share in denim exports.