Finance & Economy | News & Insights

Gujarat’s Denim Industry Faces Revenue Pressures

Published: December 15, 2023

Gujarat, the denim capital of India, has experienced a significant decline in revenue for six consecutive quarters, starting from April last year. The once booming denim exports, mainly to Europe and the US, provided a lifeline to Gujarat’s denim mills during the Covid-19 pandemic.

However, economic setbacks, including changing fashion trends, shifting consumer choices, and reduced discretionary spending, have affected distressed jeans’ demand for and market share.

The textile industry, which heavily relies on the success of denim sales, is also feeling the impact of these market shifts. The ongoing economic slowdown in Europe and inflation pressures in the US have resulted in a significant decline in denim sales over the past year.

Consequently, pipeline stocks have accumulated, and orders have plummeted by at least 30% as consumers have reduced their spending power.

According to an Ahmedabad-based denim manufacturer, the situation worsened since February 2022, when the Russia-Ukraine war broke out. Following these events, demand for denim has experienced a sharp decline, leaving the industry struggling to utilize 60% of its production capacity. Post-Diwali holidays, many units have remained partially or fully non-operational due to a lack of demand.

The current scenario has forced denim manufacturers to grapple with the rising popularity of knitted, woven, cotton, and linen bottom wear, further exacerbating their struggle to stay competitive. How the industry will navigate these challenging times and reverse the declining revenue trend remains to be seen.

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