The price of raw cotton has risen from Rs 36,000 per candy in September 2020 to Rs 78,000 per candy in February 2022. As a result, denim production has declined by 30% in the last six months.
Industry experts affirm that the worst affected are the mills that have entered the denim business recently.
Sanjay Jain, the chairman of the Indian Chamber of Commerce (ICC) National Textile Committee, said that with an increase in production cost, manufacturers are unable to sell in this on costs to their end-consumers.
Large scale manufacturers have exports orders which helps them to sustain production and revenue. For instance, home-produced types of denim like Arvind Limited, Nadan Denim, Jindal Worldwide and Vishal Fabrics have achieved profits in the third quarter of 2021-22. Nadan Demin had a 584% surge in its profit.
But the majority of the Denim manufacturers belong to micro small and medium enterprises. Hence, the costlier cotton, cotton yarn and other raw materials grapple their denim production.