India’s textile exports to the UK and the European Union (EU) will increase by 30-40% in the next 15 months due to the recently signed trade agreements, says Sharad Jaipuria, Chairman, Denim Manufacturers Association (DMA). In an exclusive chat with The Economic Times Digital on the sidelines of Gartex Texprocess India in the capital, Jaipuria, who is also the CMD of Ginni International Ltd, discusses the growth potential of India’s textile industry, including denim, in the context of recent FTAs. He also emphasises the importance of skilling for the industry to maintain a competitive edge. Edited excerpts:
The Economic Times Digital (ET): India has the world’s second-largest denim manufacturing capacity after China. What gives India an edge in denim today, and where do you see the biggest opportunity for the industry going forward?
Sharad Jaipuria (SJ): India produces about 1,600 million metres denim annually, which is quite a significant capacity.
The advantage in India is that most of the mills are vertically integrated. Every facility—from spinning and weaving to denim manufacturing, of course—is integrated. The missing link is that not everybody has garment capacity.
Few mills have extensive garment facilities, which is the requirement for most international buyers. I am sure other mills will also now set up garment facilities because with free trade agreements (FTAs), India will have duties at par with Bangladesh, Pakistan, and other countries. Value-added products will be much better for India in the future because of the FTAs.
ET:India still has a relatively smaller share in the European textile market compared to countries like Bangladesh. How significant could the UK and EU trade deals be in expanding India’s textile and denim exports?
SJ: India’s share in the European textile market is only around 3%. The volume is very low. They get most of the textiles from countries like Bangladesh and Pakistan and some from Turkey. Then we had the disadvantage of almost 12% duties compared to Bangladesh or Pakistan. Since FTAs have been already signed and may come into effect in the coming months, I expect India’s exports to these European countries to grow by 30-40% in 15 months.We also anticipate another annual increment of 10-15%. This gives a big boost to exports of textiles as well as garments from India to Europe and the UK.
ET: Sustainability has become a major priority for global textile buyers, while denim is particularly water- and chemical-intensive. How is the Indian denim industry responding to this shift, and what changes are you seeing across the industry?
SJ: Everybody is talking about sustainability, and it is happening because everyone now cares for the environment. In India too, most textile mills are seeing what they can do best for the environment, starting with recycled cotton, pesticide-free cotton, and consuming less water in manufacturing denim and garments. The government has also made it mandatory to recycle water, which is leading more manufacturers to adopt such practices.
ET: What is the role of associations like DMA in the industry’s growth? What are some of the significant policy changes that can help the textile industry moving forward?
SJ: DMA is a platform where the industry people put their minds together. Then it connects with the government to understand the issues faced by manufacturers or factories. If any policy changes are required, then we talk to them.
Also, if there is a chemical producer or technology company in India, it could be more interesting to understand. It’s one platform where they can come and speak and showcase their technologies so the entire industry can take advantage.
In terms of policy changes, the Commerce Ministry has intensified its push with several FTAs signed in recent months. The government is also considering how to increase manufacturing capacity so that value addition happens in the country, eliminating the need to go to Bangladesh, Vietnam, or Sri Lanka.
Many state governments—new states like Chhattisgarh and others—have also come up with very proactive policies to facilitate setting up garment industries, making it easier for entrepreneurs to increase production in India.
ET: What strategy should textile manufacturers adopt to maximise the benefits of the FTA?
SJ: We must prepare ourselves. Naturally, we have to be in touch with the customers. It takes time for sampling. We have to do sampling with them.
We must understand their requirement and produce accordingly. Also, we need to have the right kind of garmenting facility. They have to come and approve. It is a pretty time-consuming process when you set up garment plants also.
If we don’t have the right garment factories approved by them, they will not buy. Most of the larger players in India are enhancing their garment production capacities to produce and supply garments because what goes from India is mostly fabric, not garments.
Similarly, many people from Bangladesh and other countries would like to set up garment factories here in the near future so that garments can be exported duty-free from India to many of these countries after the various FTAs.
ET: What are some of the major consumer trends currently taking shape in the denim industry?
SJ: One is, of course, sustainability. Besides this, comfort is really at centre stage. Denim has become more comfortable. Even for travel, earlier it used to be thick denim, but now there is leisure denim as well, which is easy and breathable so that you don’t sweat in it.
The trend is also changing in the fashion sector—ladies and children are looking at more colour options, not just indigo dye. So, a lot of colours are coming in now.
ET: What impact are technology and artificial intelligence (AI) having on the denim industry?
SJ: India has been slow on AI. But the benefit is expected to come very soon. I would expect that we will see much more changes within 12 months.
ET: What was the impact of the West Asia crisis on the textile industry, and how did it respond to disruptions caused by this geopolitical shock?
SJ: This disruption is happening because of war, so the buyer also becomes cautious in the process. So many of these markets are slower because of this disruption.
And then, you know, freight costs have also increased sharply. So that has been adding to the cost. So, the exports—what should have happened, the growth of exports that should have happened—could not happen. They are suffering.
ET: If we compare India’s denim industry to that of Vietnam or Bangladesh, what is India’s position and how can it improve?
SJ: As far as denim is concerned, India is on the top. With the benefit of the FTA, we are at par with many of these countries, whether it’s Vietnam, China or Cambodia. Except that in India, the focus is only more on cotton. The government is also understanding that and reducing the duty and encouraging the production of garments. Now India is also moving towards MMF (man-made fibres) fabrics. On the garmenting side, India was earlier not doing garmenting since export potential was less because of higher duties.
However, with the incentives given now by the central and state governments for encouraging garmenting, I am sure in the next two or three years, a lot of garmenting potential will come, and India will be competitive in textiles.
For example, the UK and Europe FTAs are likely to show impact in the next six to nine months. After that, an increase of 30% can be expected in the next 12 months. Thereafter, a sustained growth of 10% annually is anticipated.
ET: Is there anything textile exporters need to be more mindful of in the current environment, particularly in their strategies?
SJ: Skilling of workers is very important. The skill levels are even lower compared to Bangladesh and Pakistan.
Corporates setting up garment facilities on a very large scale will also need to focus on skilling workers to increase productivity. For example, we have seen in the case of Apple phones. Apple not only set up plants but also gave training to 40,000-50,000 people because some of the largest exporters of mobile phones are here.
Similarly, garment factories will come up here. The incentives that are being given by the central and state governments will help. I think skilling is also very important. FTA signing is one part; the other part is skilling. For the last 30 years, we have talked about India having the advantage in textiles, but we did not have the chance to take the advantage. We should not let this opportunity pass.
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