India: Denim bypass Bangladesh to China

Due to the devaluation of the Indian rupee, the appreciation of the Chinese currency, the increase in labor costs in China, the slowdown in the western economy, and the lower labor and electricity costs in Bangladesh, Indian denim is now entering China through Bangladesh.

Since June, the Indian Rupee has depreciated by about 20% against the U.S. dollar. During this period, the Chinese *** appreciated 4% against the US dollar.

Therefore, more and more expensive jeans are produced in China. China imports cotton from India to produce denim. In addition, Chinese wages are also growing. Also, domestic consumption has expanded.

As a result of all these factors, China has found that purchasing denim from India is more economical than producing denim domestically. Therefore, China has begun to import denim from India for use by domestic companies and export it to other countries.

Mr. Vikram Oza, finance director of Jindal Global, a denim manufacturer based in Ahmedabad, said that due to the economic slowdown in the EU and the US, their overall demand is declining. On the other hand, the penetration of jeans into a populous economy such as China and India has not yet reached a certain level.

In the United States, per capita consumption is about 8 jeans per year. In comparison, India's per capita annual consumption is 0.3, and China's per capita annual consumption is less than one. Therefore, the average demand in India and China is 2-2.5 per capita.

He said that China’s labor costs have recently risen. As a result, Indian denims have entered China through Bangladesh and Vietnam, especially Bangladesh. Indian denim first entered Bangladesh. The minimum monthly wage in Bangladesh is about Rs. 2250, while in India it is 7,000 Rs. Another factor is the cost of electricity. India is Rs 5.50/unit, while Bangladesh is Rs 3.50/unit. The downturn in the European market has also helped Indian denim to enter China because of the growing demand for denim in China.