Indigo price rise upset denim makers

Monday, 09 July 2012

Despite a recent drop in prices of cotton, consumers will have to shell out extra for their denims. And this time the blame is on the increase of import prices of indigo dye which is used in making denims. India imports almost 100 per cent of the raw material from China. Dwindling rupee value has led to an increase of 25-30 per cent in import costs of indigo dye in last one month, forcing denim makers to hike their product prices.

While 99 per cent of indigo dye is imported from China, only one per cent of the natural dye is developed in India. India imports indigo dye in synthetic form which is either in powder, liquid or granule forms. A small amount of the raw material is also imported from Europe and the US. According to Aamir Akhtar, Chief Executive Officer-Lifestyle fabrics (denim), Arvind they are facing an increase of 10-12 per cent in indigo costs in last one month and this has been passed on to the consumer in the form of a $3.8-4 (Rs 209.90 – Rs 220.94) per meter price hike. In order to make 100,000 metres of denim fabric, it requires around one ton of indigo dye. India imports about 7,000 tons of indigo dye amounting to more than $42 million (Rs 2,000 crores) per annum.

Stable prices of cotton and spandex have been the only relief to the denim industry. "Reduction in cotton prices have somewhat compensated the increase in indigo costs for us. We could somehow manage to pass the burden on to consumers," said Utsav Pandwar, Financial Controller at Aarvee Denims & Exports Ltd.

However, on a more optimistic note other colors such as red, green, blue, pink and yellow which are used in non-jeans products are making their way into denim. Yet, denim makers cannot do away with indigo dye and will eventually have to bear the price rise or pass it on to consumers, feels Rajiv Dayal, Managing Director, Mafatlal Denim.

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