Raymond looks to cash in on trade war; may raise garmenting capacity

Varun Aggarwal Mumbai | Updated on May 13, 2019

Sanjay Behl, CEO, Raymond   -  BL

Eyes Telangana, Jharkhand and AP for investment

Gautam Hari Singhania-led textile major Raymond is exploring the possibility of enhancing its garmenting capacity as the ongoing trade war between the US and China opens up fresh opportunities for Indian textile companies.

Raymond Group, which manages garmenting business through its wholly-owned subsidiaries — Silver Spark Apparel (suits), EverBlue Apparel (jeans wear) and Celebrations Apparel (shirts) — is exploring opportunities in Andhra Pradesh, Telangana and Jharkhand based on the incentives these States offer.

New segments

The company has lined up a capital expenditure of ₹ 250 crore for this financial year and entering into new segments such ethnic wear through khadi brand and women’s workwear. The company recently completed a project to produce 4.2 million metres linen fabric per year in Amravati.

Sanjay Behl, Chief Executive Officer, Raymond, in an interaction with BusinessLine, said the company has bagged an order from one of the US’ largest bespoke players that had moved 20-25 per cent of its production from China. The supply started three months ago and will be scaled up in the coming months, he said.

“I am actively evaluating Telangana and Andhra Pradesh for garmenting. About 95 per cent of garmenting labour is done by women and it becomes the second income in a household. A small facility can generate jobs for 3,000-5,000 women and it is good for the State,” he said. Jharkhand offers attractive incentive for garmenting industry and a few competitors have moved in and Raymond is also evaluating it, he added.

Though, he said, the focus now is on up-selling present capacity and improving value realisation.

“As we are doing this, we are evaluating some more capacity if it comes at a lucrative economic proposition,” he said.

Exports looking up

Portfolio buying for US retailers earlier was 90 per cent China and 10 per cent the rest of the world but this has started moving to 65 per cent China and 35 per cent others, said Behl.

India has managed to beat competition from countries such as Bangladesh, Vietnam and Sri Lanka, which enjoy duty-free access to the US market.

Behl said the minimum wage in Bangladesh was almost half of that in India, but in last six months it has gone up by 55 per cent. So, the relative advantage of duty is somewhat negated, he added.

On the other hand, here the government has given 4-6 per cent export incentives to the garmenting industry in the last two months. Earlier, this was subsumed into GST but now it is given as incentive.

Published on May 13, 2019

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