Gujarat-based textile major Arvind Ltd is exploring leased manufacturing facilities and other asset-light production models to expand its denim capacity as strong customer demand pushes denim fabric volumes to their highest level in four years.
Arvind’s denim fabric volumes increased 34% year-on-year to 17.5 million metres in the June 2026 quarter, marking the company’s strongest quarterly denim volume in 16 quarters. Management expects demand to remain strong through the end of 2026, with no immediate signs of pressure on volumes.
“We see a robust demand going forward. Till the end of the year, we do not see any pressure on volumes,” said Punit Lalbhai, Vice-Chairman and Executive Director of Arvind Ltd.
The strong demand comes as Arvind’s existing manufacturing assets are operating at around 100% utilisation, leaving limited room to increase output through its current facilities.
Instead of relying entirely on new, capital-intensive factories, the company is evaluating non-functional or underutilised manufacturing assets available in the market that could be operated through lease arrangements.
The asset-light approach would allow Arvind to add production capacity with lower upfront capital investment and potentially bring additional capacity online faster than developing a new greenfield facility. The company is also evaluating other flexible manufacturing arrangements as it seeks to take advantage of the current denim demand cycle.
“Currently, not much has happened, but in the future we are exploring those options. It is a good demand cycle and we are trying our best to take advantage of it,” Lalbhai said.
Arvind’s denim business has been gaining momentum since FY26. Denim fabric volumes reached around 17 million metres in the March 2026 quarter, up 19% year-on-year, while full-year FY26 denim volumes increased approximately 15% to around 60 million metres. The latest June-quarter performance represents a further acceleration in the business.
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The company is also looking beyond volume growth, placing greater emphasis on premiumisation, product development and design capabilities. Arvind has brought Japanese consultants and designers into its denim operations to develop more differentiated and premium fabrics and strengthen its ability to respond to international fashion trends.
The company currently operates design hubs in the United States and the United Kingdom and is evaluating one or two additional locations in Europe.
These hubs are intended to keep Arvind closer to global customers, improve its understanding of changing market requirements and enable faster product development.
Arvind is also increasingly using partnerships and flexible manufacturing arrangements as part of a broader strategy to expand production without owning every stage of the manufacturing chain. This approach can provide additional flexibility in responding to customer demand while helping the company maintain tighter control over capital expenditure.
The strategy comes at a time when global denim sourcing is becoming increasingly focused on speed, product differentiation, sustainability and supply-chain flexibility.
For Arvind, the combination of full utilisation, rising volumes and stronger demand creates an opportunity to increase its market presence, while leased facilities and other asset-light models could help the company avoid the financial burden and longer timelines associated with building entirely new factories.
If the current demand trend continues through the remainder of 2026, Arvind’s combination of asset-light capacity expansion, premium denim development and global design capabilities could strengthen its position as a major supplier to international denim and apparel brands.