News & Insights | Textile machinery

Due to a lack of liquidity, the denim industry is struggling.

Published: September 30, 2023
Author: TEXTILE VALUE CHAIN

Gujarat’s denim producers are struggling with a lack of liquidity as a result of slow payment cycles and weak demand. Industry insiders claim that over the past six months, the sector has gone through its worst period in 15 years, and if demand does not pick up, certain units may cease production.

Gujarat, with an installed capacity of roughly 1 billion metres annually, is the denim capital of India. However, several companies’ expansion ambitions have been hampered by the recession.

According to the director of a major denim manufacturing company, the liquidity bottleneck is the result of low demand and payment delays that are far longer than normal for the credit cycle.

Rahul Shah, co-chairman of the Gujarat Chamber of Commerce and Industry’s (GCCI) Textile Taskforce, stated that according to their projections, denim exports and domestic sales will decline by 30% in 2022–2023.

Major Western economies were damaged by the Russia-Ukraine conflict, which had a substantial impact on global market demand. Demand is being affected by a trend change in which individuals favour non-denim and comfortable clothing.

Due to high interest rates, merchants and importers worldwide have reduced their stock holdings.

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