Known for its culture and socialist way of thinking, Kolkata is also the birth place of the hosiery industry in India way before independence. With a textile lineage, the Kolkata industry has moved on to become a known destination for workwear and intricate hand embroidery for the international market. Apparel Online has covered in detail the workwear industry in its November 16-30, 2009 issue, highlighting some key players and the dominance that Kolkata enjoys in this product category. Earlier we had detailed the importance of Kolkata hand embroidery in Western bridal wear, a growing market for niche players.
Kolkata Knitwear Industry Gaining Ground Innerwear and Kidswear the two Growth Segments
It is ironic that while Kolkata is so entrenched in the international arena in the above two categories, the city lost its direction in hosiery despite progressing to become the biggest supplier of knitwear in the country in the 60s. Subsequently, with political climate unfavourable to fresh investments, the industry continued to suffer, coming to an all time low with the labour crises in the mid 80’s. In the meanwhile, taking advantage of the growing demand in knitwear, the small town of Tirupur developed its growth as a major knitwear segment, marching ahead into the international market. Today, every buyer working in knits is familiar with the city.
But, things are now changing and Kolkata is making a strong comeback… over the last three years there have been noticeable movements in the industry leading it to become the largest manufacturer of knitted children’s wear for the domestic market and the hub of national brands in men’s innerwear. Team AO was in Kolkata recently to get a first hand feel of the pulse of the knitwear segment and the directions for the future…
Industry informed sources
estimate that the hosiery
business in Kolkata is worth around Rs. 2000 crore and growing at about 20% year-on-year. The potential growth, according to insiders is at least Rs. 10,000 crore bringing the industry close to the current status of Tirupur. These are
not just stand alone figures,
but estimations based on
Who has not heard of Rupa, Lux, TT, VIP, Dollar and Amul when talking of the men’s innerwear segment? With major presence in the domestic market, these brands symbolize the rising of the sphinx from the ashes so as to say and are the major drivers of growth in the hosiery sector in Kolkata. And even bigger then this traditional segment is the flourishing kids knitwear manufacturing segment which has seen the birth of brands like Zero,
A First, First Body, Top Baby, Mickey, Point, Bambino, Zoo to name a few leading ones, available at all stores selling kidswear around the country. No doubt, the Kolkata knitwear industry is dominating the domestic market, but there is no real thrust on exporters… Why?
While there are a few export houses in Kolkata, in knitwear namely NM Exports, Bonnie Exports, BV Enterprises, Robin Exports and Susknit Exports… the number is so small compared to the size of the industry that it is practically negligible. Further those who are exporting while working in the domestic market are mostly doing so to the middle-east, which is more or less like the Indian market. The reasons are straight forward and practical… “We do not have integrated manufacturing units and the industry is scattered in and around Kolkata, what do we show to the buyers,” reasons Sanjay Jain, Joint Managing Director, TT Limited.
It is indeed surprising to know that only a handful of manufacturers have stitching facilities under one roof, others are outsourcing their requirements to small manufacturers having units of 10-20 machines all over the city and beyond. Even the big brands in innerwear and kidswear
Baby wear from brand Zero
Printed knits from Madhva Textile Processors
prefer to work with many units. “After the labour crises and union threats in the past, nobody wants to take the responsibility of a large number of workers in a single unit,” says KB Agarwala, MD, Rupa. His views are echoed by the entire industry. The few integrated units are Kothari Hosiery, JMC Garments, Exodus, NM Exports and Cotton Casuals. In the meanwhile, the bigger innerwear companies too are now moving in that direction.
The highly fragmented nature of the industry also affects the consistency in quality and timely deliveries… the two critical parameters to work successfully in the international market. “Though manufacturers are placing supervisors at the small manufacturing sites, quality is still an issue and the realization has come that to increase business integrated units are a must,” says BD Kothari, Director, Kothari Hosiery. This was perhaps the biggest reason that the West Bengal Hosiery Association has initiated a hosiery park under the aegis of West Bengal Hosiery Park Infrastructure Ltd. The park which was pending clearance on technical grounds from the State Government and grant of Rs. 40 crore from the Union Government under the SITP scheme is eagerly awaited by the industry. A second Hosiery Complex is planned by the Bengal Hosiery Manufacturers’ Association for which land is still being acquired.
In the meanwhile, the industry is very upbeat of the developments over the last few years which speak of the preparedness of the industry to move up the value chain. According to Shree Prakash Chandak, Director, Eastern Textiles, the biggest factor which has resulted in upgradation of the industry is the increased investment in the processing area with at least
five new units coming up in
the last three years. “Not only have the big brands invested in processing but even those companies which are specializing in processing
have installed latest
imported machines for processing,” says Chandak.
According to industry informed sources, there are four units with 10 tonnes per day capacity, 10 units with a capacity of 5 tonnes fabric per day or more, at least 15 units with 3-4 tonnes per day capacity and 30-40 units of 2-3 tonnes per day capacity. All new units coming up are having modern soft flows, compactors, relaxed dryers, high efficiency husk/coal boilers, etc. The development in this area is supported by Government assistance as well as through financial institutions. Because of this fast development, the capacity for processing has more than doubled in the last three years and it is estimated that today
the total capacity for processing is over 200 tonnes per day in Kolkata.
“All these units are of good quality dyeing and it is projected that over the next two years most of these units will increase capacity by 25% at least on an average,” says Sushil Jain, MD, Dyechem International. The company is supplying chemicals to the industry and is relentlessly working to make the industry environment-friendly. “In fact, if the political scenario improves in Kolkata things can move really fast as Tirupur is slowing down due to water problems,” adds Sushil. Significant players in processing are Rupa, Mahadev Fabrics, Kothari Hosiery, Popular Dyeing, Delta Fabrics, Sarat Processing, Abhishek Dyeing, Sarda Dyeing, Balatekno, Exodus, Madhva Textile Processors to name a few.
“With processing facilities improved, the hosiery industry is supplying better quality fabrics with soft hand-feel; this has aided both the innerwear and the kidswear segment as both are products that require skin-friendly fabrics,” says Sanjay Todi, Director, Madhva Textile Processors. The company is the first to install rotary printing for the industry with great success. “We have done some amazing prints for the knits industry and now we want to add one more
machine as the demand far outstrips the supply,” says Todi. Kothari Hosiery is another
unit that is looking to invest in rotary printing.
The demand for printing in the Kolkata region can be gauged from the fact that 5-7 lakh metres of printed fabric is coming into the region on a daily basis. “My estimation is that Kolkata is picking up around 14% of total printed fabric happening in Surat,” says Todi. He however does clarify that not all of it is in knitted fabric and printed woven fabric for ethnic wear are also a growing area for the region. Todi’s company is also one of the few processors that is offering technical finishes like flame retardant for the work wear segment that is using both knitted and woven fabrics.
While on the one hand processing has improved manifolds, on the other there has been a marked increase in the capacity for knitting; it is estimated that in the last 4 years, at least 600 new circular knitting machines have been installed in Kolkata. “Since January 2010, I have already supplied more than 100 circular knitting machines to the Kolkata industry,” claims Prasanna Kumar Behera, Volstart Texnet Services, which represents Singapore-based Unitex Circular Knitting Machines in the region. With 50% market share in the region the major investors for Unitex in the last few months have been Rupa with 60 machines and Lux with 45 machines. Besides this an upcoming brand in kidswear, Four Star has recently invested in 32 Pai Lung circular knitting machines under one roof and many other smaller brands have also increased their presence.
Even while the knitting segment is growing, the absence of big spinning mills in the region is strongly felt. It is estimated that the Kolkata hosiery industry is utilizing 5000 tonnes of yarn per month. “About 700 trucks of yarn are downloaded on a daily basis for the knitwear industry in Kolkata,” claims Amit Sonthalia, Director, SR Textile & Yarn Sales. The company is representing 20 spinning mills in the region including big ones like Alok, Bombay Rayon Fashions, Reliance and smaller ones in Coimbatore and Erode. The company also has a weaving unit in Ichalkaranji in Maharashtra.
There was a time when there were more than 18 spinning mills in the region, but with the business environment subsequently hitting a low, there are now only 5 major spinning mills in the region. “We have struggled to keep our mills in West Bengal and we had to take one of our units to Orissa, however, our next expansion of 150 tonnes is planned in West Bengal,” says PK Patodia, Director, Keshar Group, one of the few spinning mills headquartered in Kolkata. The company is spinning both cotton and polyester yarns, though the requirement for the hosiery segment in the region is only of cotton yarns. The production capacity for the cotton yarn is 400 tonnes per month.
Directions in Kidswear
Ramesh and Amit Sonthalia, Directors, SR Textile & Yarn Sales
Pradeep Arora, Director, Cotton Casuals
Shree Prakash Chandak, Director, Eastern Textiles
Sanjay Todi, Director, Madhva Textile Processors
PK Patodia, Director, Keshar Group
Sreemoy Banerjee, President and Sharad Kumar Bhatter, Hony. Gen. Sec. The Bengal Hosiery Manufacturers’ Association
Sushil Jain, MD, Dyechem International
Prasanna Kumar Behera, Volstart Texnet Services
Since both the product categories that are the strength of Kolkata are manufactured for the domestic market, cotton is the preferred choice. However, some brands in the kidswear segment have started to experiment with polyester viscose. But it certainly cannot be considered a trend. “Kidswear is all about comfort and with Indian weather cotton is the obvious preference,” says Pradeep Arora, Director, Cotton Casuals, the owners
of the brand ‘Zero’ a trend
setter in Kolkata.
In fact, Pradeep is credited for exploring and creating opportunity in children’s wear, when innerwear, basically vest and briefs was the only option in hosiery. “I started my career in this line retailing children’s wear imported from Hong Kong; gradually it struck me that we should start manufacturing the product locally to meet the huge demand for infant wear, as also the price points. Once I started, the response was so overwhelming that it opened a door of opportunities leading to over 200 companies entering the fray and all are doing good business,” says Pradeep. Today all major apparel retailers including Reliance, Pantaloon, Big Bazar, Vishal Mega
Mart are sourcing their kidswear requirements in
knits from Kolkata.
The quality of product is at par with international brands and much effort is put into designing and colour. “The biggest challenge in babies wear is colour, even the best of styles will fall flat if it is not in a colour appropriate to babies so we have different shades of the blues, pinks, greens and whites every season,” avers Pradeep. His company is among the few which is integrated having stitching operations under one roof. The demand for kidswear is so huge in the domestic market that most of the manufacturers do not feel the need to explore exports.
The Kolkata –
Tirupur Relation in Innerwear
It is history that with the development of Tirupur, all major brand owners of innerwear in Kolkata set up units in the city to be competitive. What are being manufactured in Tirupur are the vests while briefs and drawers have always been made in Kolkata. “Manufacturing of vest are more competitive in Tirupur, earning it the reputation of ‘banian city’ while briefs work out cheaper in Kolkata,” informs Agarwala. Today, many of the companies are shifting their units back to Kolkata as Tirupur becomes expensive even in vests. In fact, according to the industry, many products are coming to Kolkata for processing from Tirupur as the city struggles with issues of pollution that have crippled the competitiveness of the industry.
Another major reason for increasing cost in Tirupur is the acute shortage of labour. That is not to say that the Kolkata industry is not facing shortage… it is, but compared to Tirupur the situation is better and there is a larger pool of workers available both in the State and neighbouring States of Bihar and Orissa. What Kolkata lacks is proper training facilities. “We have one ATDC centre in the city, but despite giving free training the response from the workers has been very lukewarm,” informs PR Agarwala, Chairman, Rupa. He however feels that the edge which Tirupur enjoyed is over and Kolkata is fast catching up.
Brands from the house of Rupa
The quality of fabric knitted and processed has improved in Kolkata
It cannot be ignored that labour in the region is at least 15% cheaper than in most parts of India and though the association has imposed upon its members through an agreement to pay minimum wages as defined by the Government, workers are still not satisfied and some have preferred to remain in their villages living off the earnings under the NREGA initiative.
The real challenge in innerwear today is the influx of foreign brands like Jockey, Fruit of the Loom and Hanes into the country. “We can think of export market only when we have been able to consolidate our position in the local market and for that we have to compete and deliver products at par with international brands. That is why all inner wear brand owners are targeting the young brand conscious generation with new up-market options promoted by celebrities,” says Agarwala. This feeling of competition has in fact aided the up-scaling of the industry with major investments happening to enhance both capacities and quality.
While things are looking very positive in Kolkata with everyone associated with the industry on a high, it cannot be ignored that the future growth and direction of the industry is dependent on the political will of the ruling Government. “The industry is geared for the leap and all players are looking to increase capacities and bring manufacturing into a more organized structure, but it cannot be done without the support of the Government… the best example is that of our neighbours across the border in Bangladesh, where the culture of the people is very similar and there is a shared history in hosiery, but which has
overtaken India in exporters riding on major Government support,” concludes Sreemoy Banerjee, President, The Bengal Hosiery Manufacturers’ Association.
Hosiery Park at Howrah…
The West Bengal Hosiery Association has initiated the formation of West Bengal Hosiery Park Infrastructure Limited to setup a 120 acre hosiery park in Howrah district to take advantage of industry cluster concept. The scheme is envisaged under the Government of India Scheme for Integrated Parks (SITP) with common infrastructure and support services. About 300 members have already registered to be a part of the proposed park, which will conform to all norms of a ‘green’ facility. Hence, processing is not proposed inside the park. The park will house units for knitting, cutting, stitching and packaging of knitwear items. The park will also house a training centre to meet skilled labour requirements. According to the management, the park is expected to be operational in another two years time and will change the complexion of the industry.
How the Kolkata Industry Works…
Though the Kolkata manufacturing industry is highly fragmented it works in coordination, with each operation an individual identity. The manufacturer is procuring the fabric from knitters and then sending the same to processing units for dyeing and finishes as per requirement. Once the fabric is ready the manufacturers are cutting the patterns, making bundles and sending out to sewing units. Once the stitched fabric comes back it is pressed and packed at the manufacturers’ units. Most of the manufacturers are supporting the sewing units with up-dated machines to ensure productivity, quality and timely delivery. Now the industry is looking to bring at least some of the sewing under direct control of the manufacturers, but there are many reservations.
Can West Bengal become another Bangladesh…?
Everyone in the industry is well aware of the progress that their
neighbours in Bangladesh have made, but the unanimous feeling is that the only real edge that Bangladesh enjoys is of the support it gets from the Government by ways of incentives. Even though the wages in Bangladesh are set to increase from 1st November 2010, wherein the new minimum wage would be 3,000 taka ($ 43), up from 1,662 taka ($ 24), the cost of product in the country will still be competitive because of the unwavering support of the Government. Some of the incentives that Bangladesh enjoys way above Kolkata and for that matter India are:
Export incentive of 5%; cash incentive if local fabric is used.
Can import fabrics and other accessories under Custom Bond system. No need to pay duty and taxes.
Import of capital machinery without duty and taxes.
The exporters can deposit 7% of their export earning in foreign currency under a retention quota in their foreign currency account in the forms of US dollar, pound sterling, Japanese yen or euro. The amount of the retention (in terms of percentage) will be fixed by the Government/Bangladesh Bank. This foreign currency can be used to fulfil real business needs like business trips abroad, participation in export fare or seminars in foreign countries, import of raw materials and spare parts and setting up office abroad.
Back-to-back Letter of Credit (L/C) can be established either at sight or deferred payment basis against confirmed Letter of Credit (generally called export L/C) or confirmed contract.
The exporters can get 90% of the L/C amount from commercial banks under irrevocable Letter of Credit or confirmed contract. The commercial banks will consider such cases on priority basis.
If the export is made on the basis of site payment under irrevocable L/C, the commercial banks will not impose overdue interests subject to the submission of necessary documents by the exporters.
The export-oriented industries will get the advantage of importing 10% spare parts of their capital machineries without duty every
Export of high-priced (jacket/formal trouser, etc.) readymade garments (RMG) is allowed 3 years tax holiday. RMG exporters situated at Export Processing Zone (EPZ) enjoy 10 years tax holiday.
RMG exporters, who are not enjoying tax holiday, pay a tax 0.25% of export value.
Manufacturers of accessories, like thread, carton, button, elastic, interlining, are also allowed to import duty and tax-free importation.
They can also use Custom Bond facility.
VAT is returned on export supplementary services like C&F service, telephone, telex, fax, electricity, insurance premium.
Prior to getting real work order, export enterprises can spend up to
$ 6,000 in foreign currency annually for communication, sending
representatives, foreign tour and tender document purchase, etc. More money needed for these purposes can be released with the approval of Bangladesh Bank.
In general cases, highest $ 3,500 including postage expenditure can be spent annually to send samples of export products.
The RMG producers and exporters can import specimen products as high as 0.2% of its previous years’ export without the permission of the Chief Controller of Import and Export or any permit. The newly set up units can import the fabrics/yarns/acrylic. The quantity will be 0.2% of half of its approved capacity.