Global apparel retailers to source more from India

Bindu D Menon Mumbai | Updated on November 30, 2017


Other major supplying nations are grappling with labour, low-skill issues

Global retailers are expected to step up sourcing from India as other major destinations such as Cambodia and Bangladesh slip amid concerns over compliance and labour issues.

Last week, Japanese apparel retailer Uniqlo sought a tie-up with Indian garment makers. Others, such as Gap, Decathlon, H&M, Zara and Marks & Spencer, are already sourcing from India.

The Apparel Export Promotion Council said Uniqlo had asked it to identify the 10 largest domestic clothes manufacturers and exporters with whom the Japanese firm could tie up for exports.

“India can take advantage of its global competitiveness. We have given Uniqlo a list of names, such as Orient Craft and Gokaldas Exports, which can be tapped for sourcing. Besides, Ludhiana, Ahmedabad and Tirupur are being looked at as potential sourcing hubs,” an AEPC official said

Keen to exploit

The Government is keen to exploit the country’s competitive advantages, such as low labour cost and steady availability of raw materials, the official added.

While Cambodia has been in the news for using child labour, Bangladesh has been facing labour unrest. Several other countries are grappling with issues such as outdated machinery and low-end skills.

“The apparel sourcing business is dependent on a few countries.

“One of the key things that apparel retailers look for is sustainability. India offers that potential in the long run,” said Rachna Nath, Retail and Consumer leader, PwC India.

Nath said international chains planning to source from India are also the ones looking for ways to fulfil the 30 per cent sourcing clause in multi-brand retail.

Contrarian view

Arvind Singhal, Chairman of retail consultancy Technopak, however, doesn’t think sourcing will get a fillip with international retailers showing interest.

“Almost all the major global retailers are already sourcing from India. Sourcing can grow big if companies invest. Here, they are not investing in back-end infrastructure but merely sourcing from vendors,” he said.

Singhal notes that Bangladesh could still be competitive for retailers despite labour challenges.

“Bangladesh’s exports for this year have already touched $25 billion compared to India’s $17 billion,” he pointed out.

A Boston Consulting Group report says consumption expenditure on apparel is likely to increase nearly four-fold to $225 billion in India over the next seven-eight years.

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Published on July 02, 2014
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