Most of the buyers agree that India has lost or is losing its edge as a sourcing destination. Many feel that India has the potential, but there is lack of commitment from both the industry and the Government to make the changes that could lift India from being ‘another sourcing destination‘ to a ‘preferred sourcing destination‘. Increasing capacities, improving productivity, better products, more focus on PD, shifting factories to cheaper bases and industry-friendly policies are some of the suggestions. Of course everyone is waiting for the FTA with Europe and buyers are hinting that with compliance becoming a bigger issue, India may gain from the current mess that our neighbours are in… Some of the interesting feedbacks from our survey are:
Megan Murphy, Senior Manager, International Corporate Affairs, Walmart
India continues to be an important sourcing market for us. Our suppliers in India have provided high quality products at competitive prices for several years, and we are confident that India will remain globally competitive and look forward to continued sourcing opportunities.
Deepak Gaba, India 2 Source
India has never been the number one priority for western brands or retailers as countries like Bangladesh and Vietnam enjoy advantages in terms of duty agreements with the European market, in addition to low cost of production. Though the industry is doing well in a few categories like towels, bedding, etc. but it is not ably supported by the Government and is mostly driven by entrepreneurs who face various hurdles and barriers in terms of resources. It is vital for Indian exporters to be design-oriented and be competitive in comparison to the cheap neighbouring countries. For us, India is relevant for sourcing, unless economic conditions make it impossible for factories here to compete with the neighbours and labour shortage leads to difficulty in operations and delivery.
Jas Mahindru, Mega Brands
Indian exports lack professionalism and they are only flexible when in a problem or once the orders are confirmed and investments made. Nowadays fabric mills are not being accommodative, though we are the key source of cotton but still we lack in product development. All small and big exporters should work on their attitudes and take each order seriously with their respective margins. Also, the Government should work on labour wages.
Shiva Raman, s Oliver
The suppliers who can micromanage their business will continue to do well and buyers would only want to work with them. India will continue to remain an important destination for fashion brands. Meeting retail demands is no doubt difficult, and suppliers who make it a point to tune their understanding to how retail works and the demands that come thereafter, are better mentally equipped to motivate their teams. The secret to sustainable growth are lean operations, quick adaptability, micromanage to the smallest detail and competitive pricing.
[bleft]Why India has lost… Buyers’ take
• Cost disadvantage
• Capacity constraints
• Reputation of bad delivery record
• Lack attitude to change
• Lack of professionalism
• Poor infrastructure
• Failed to put back investment into the industry and upgrade
• Lack of Government support
• Higher taxes and custom duties
• No noteworthy trade arrangement
• Few players with PD skills to justify higher prices
• Week financial standing, as margins decrease
• Logistic disadvantage… not near enough to key markets
• Limited product basket
• Growing preference for domestic retail[/bleft]
Laxman Singh, Compact Buying Services
The export industry was booming in the 90’s due to which many people from other industries diversified to exports, bringing in extra funds without any knowledge of production or raw materials. While people pumped money from real estate, steel and oil business into the garment industry, the competition became too much for the regular exporters who shifted to Bangladesh and Indonesia, due to which the Indian market started sinking after a few years and the people from exports jumped to other sectors like real estate. Today the industry is emerging once again because of the hard work and consistent quality merchandise production by exporters through adapting methods such as cutting overheads on extra machines and production of eco friendly products like organic cotton, bamboo fabric and non violent silk. The current situation at Bangladesh highlights the fact that though major buyers from the US and EU are demanding factory compliances, but they always prefer to place orders in low cost production countries that are not playing well to their workers. In India, the situation is comparatively better than other countries and I think Indian industry will soon revive as many buyers have already started shifting out from China and Bangladesh.
Sanjeev Jain, TQM Global Buying
I am a sourcing company unable to place orders in India due to lack of Government initiatives which is restricted to the growth of the domestic sector and are unwilling to give extra incentives or provide trade agreements with importing countries. Unlike other countries imports from India are expensive on account of customs duty and other variable costs whereas buyers are getting GSP and 100% waiver on customs duties from other countries. Also, the tax rates in India are much higher than other countries, but still the infrastructure is underdeveloped. Since I have been sourcing from so many countries including China, I have a direct comparison on every stage that why our customers are running away from sourcing from India. Sooner or later I foresee that India would no more be seen as a manufacturing nation, but will be importing to fulfil their domestic needs. We are currently buying knit and woven both for kids and ladies wear, and also doing men’s bottom, men’s shirt, hand crochet garments and toddlers rompers. We are still looking for a good vendor base that can come into our price range and would love to bring our sourcing back to India.
Kalpesh Kabra, Kalp Exim
Indeed I feel that India is losing its position as one stop for sourcing, since most of the companies are small, there are very few examples of great success. While skilled Indian labour is inexpensive in absolute terms, due to lower productivity levels, much of this advantage is lost by small firms. Other problems remain, such as excise and tax imbalances and labour laws are still seen to be relatively unfriendly to business growth. India has a global logistics disadvantage due to its geographic location. Unlike its competitors, Mexico (for the US), Turkey (for the EU), and China (for Japan and the US West Coast), India is distant from all the major markets. Certainly, India’s size as a potential market is an important factor in its role as a hub, and many of these companies are looking to grow their sourcing base in and around India as a precursor to selling within the Indian market.
[bleft]What needs to
be done…
• Manage factories more professionally
• New players need to come in
• Improve PD skills to get better prices
• Sell service, not product
• Increase collections for autumn/winter
• Improve efficiencies for better pricing
• Ensure timely deliveries
• Policy for industry needs to be business-driven
• Response time needs to be quicker
• Upscale factories – both capacities and capabilities
• Promote India as a compliant and labour-friendly production base
• The buyer is smart… Don’t try to outsmart him[/bleft]
Anil Kocchar, Esteem Buying
It is true that India is no more a preferred sourcing destination and we are to blame ourselves for it, since the last two decades, we have created no new infrastructure for developing and manufacturing new fabrics and trims, whereas, China, has grown leaps and bounds in this field. Also there have not been specific technological advances and no new processes have been applied to our already existent manufacturing setup. We are one of the very few nations in the region to have our own local resources whereas other countries generally import these fabrics except China. This should give us an advantage in terms of pricing.
Sanjeev Kothavade, Itochu India Pvt. Ltd.
I don’t believe India has lost its position as a sourcing base as many centres are shifting towards urban or actual production areas. Retailers and brands are becoming more experienced and acquainted with India’s demography due to which they prefer to reach actual source of supply to reduce costs and remain in competition. It is important to understand the competition and to identify and to coordinate effectively with the upcoming sourcing bases and mould local labour according to requirements. Indian exporters need to be more product focused, have in-depth knowledge of product (from raw material to finished goods), make in-house facilities, follow international regulations related to labour, safety and most importantly provide quality and ensure timely deliveries. To survive price competition, Indian exporters should have shorter turnaround times and be adept with recent style forecasts.
Gurminder, Colveta India
We believe a lot of companies like us are looking for sourcing priorities in neighbouring countries which has low labour cost and mass production. According to a recent survey conducted in London, 40 per cent of the customers do not care where the clothes are made unless they are cheap. Therefore, in such scenario we have to step out of India and look for sources with cheap manpower so that the cost of basic garments with the fabric and CMT is affordable to customers. Factories can be set in areas where labour is cheap. India is very important for our collection and is a significant operational office for retail chains but India struggles to survive the cut throat competition from the other Asian countries.
Sudhir Khanna, Ekta International
Until 2005, India was a very strong sourcing base. Today, the factories are interested in making money for themselves rather than investing part of their profits, back to the industries for upgradations and compliances. The main reason for the downfall of Indian exports is the callous attitude of the Government towards the industry, while countries such as Vietnam, Myanmar and Bangladesh are constantly being supported by their Governments. We are losing out as our input costs are rising daily; also, we need good warehousing as lot of retailers are asking to hold goods at a source so they can cut down on their warehousing charges and reduce inventory.
Raghu Kumar, Union Buying
Most of our clients are considering moving their business to other sourcing countries such as Bangladesh, Pakistan, Myanmar, Vietnam, etc. due to poor power situation in our state (Tamil Nadu) resulting in delays in delivery. It’s getting tough for us to continue in this business, and we have actively started looking for factories located in other manufacturing countries. Though our clients feel that the situations would change if India signs the FTA, but it has been put on the backburner for several years now. But again with the building collapse in Bangladesh a few weeks ago, European clients seem to have taken up a tougher stand and some of the business has started coming to Tirupur.
Anu Chaddha, 3A Clothing
India is still a strong sourcing hub, as the country is rich in a variety of fabrics, versatile in quantities, quick in adapting to the fashion world, it’s a friendly and language-savvy economy and numerous amount of sourcing fair happens in the country. Still, there are various bottlenecks such as poor infrastructure, Government policies, rising overheads, shortage of power and labour shortage, which are causing the industry to stagnate and are making the products expensive. Indian exporters should strategize in order to be preferred suppliers, through building relationships, providing values, and have thorough knowledge of what’s going on in their respective company through surprise checks, effective communications, reduction in wastages and timely delivery of quality products.
Arvind Arora, TaurusTex
India has lost its position as a sourcing base as the overall environment is not business-driven. I believe that the structure of the garment industry needs to be seamless, business-driven and headed by professionals from the industry and independent of political interference. In India, imports should be duty-free, similar to countries like Bangladesh and Sri Lanka, enabling the garment exports to prosper at competitive prices. Though, India is important for our operations, but right now we only see cotton yarn as a major potential area due to it being technology-driven with less manpower involved.
Abhishek Gupta, Style and Silhouettes
India has lost its position as a sourcing base because of lack of encouragement and platforms for new entrants and competitive global pricing. In order to become preferred suppliers Indian exporters can increase their presence amongst the global buyers and highlight the benefits of working in India. Indian exporters should not only focus on selling products but also service and culture. It is important to formulate policies which are friendly for buyers in importing goods from India like the ones existing in Bangladesh. It is crucial for India to identify what sets us apart from the other Asian countries in manufacturing and in cash on those lines.
Rakesh Saigal, Precision Buying
Indian textile industry is struggling due to labour shortage, high pricing, overtime restraints, consistency, etc. Though the fabric qualities are good for the spring/summer collection, but India lacks variety for the autumn/winter collection. Overheads such as the management and staff costs have also increased significantly over the last 10 years. However, India could gain from the FTA, if it comes through with Europe as it is better compliant and transparent despite smaller setups. As China is getting more expensive due to increasing labour costs, there could be a 10-15 per cent business shift, which requires India to double up its capacities. As poly based knits and woven mills are adding more variety and spectrum, this should lead to some positive figures.
