Economy

India-China tensions may drive footwear, white goods makers to focus more on trimming imports

Meenakshi Verma Ambwani New Delhi | Updated on June 18, 2020 Published on June 18, 2020

Earlier this month, Prime Minister Narendra Modi, during his address at a CII annual session, stated that sectors such as footwear and air-conditioners have been identified as priority sectors by the government to cut down on imports and for the Make in India push.

Amid rising tensions with China, industry players said, there is amplified focus on strategies to cut down on reliance on imports.

Harkirat Singh, MD, Aero Club, known for footwear brand Woodland, said: “In January, when the Covid-19 outbreak began in China, we witnessed supply chain disruptions for certain specialised products. Since then, we have been re-looking at our supply chain structures and have been working on sourcing locally.”

He added that India is quite self-reliant in leather footwear segment and now needs to focus on developing an ecosystem for quality manufacturing of products in the non-leather footwear segment.

While many international footwear brands with a presence in India rely heavily on imports from countries like China, even local companies rely on imports for sourcing some components for footwear.

Anupam Bansal, Executive Director-Retail, Liberty Shoes, said: “For homegrown brands like us almost 70-80 per cent of the production is indigenous and only 20-30 per cent is dependent on imports. There is a strong opportunity to make India self-reliant in the footwear sector and ramping up the ecosystem for quality footwear production in the country, even if it means taking less advantageous decisions in the short term for long-term gains.”

Chinese cost advantage

In the white goods sector, despite investments in manufacturing capacities by both international and home-grown brands, reliance on components in products such as ACs and TVs from China is high due to cost advantages.

Kamal Nandi, President, Consumer Electronics and Appliances Manufacturer Association (CEAMA), said: “We are working closely with the government on reduction of imports for the AC sector as it has been identified a priority segment by the government.” However, he added, it will take a couple of years for the white goods sector to build a stronger ecosystem for component manufacturing to cut down on imports.

The consumer durable industry started facing supply chain disruptions as early as January, when the pandemic outbreak in China began. “Companies have already been looking at alternative markets for sourcing components, like Thailand, Vietnam, Indonesia and Korea, since the beginning of this year,” Nandi added.

Another senior executive with a consumer durable company said players have begun looking at scenarios to re-work supply chain pacts if tensions between the two countries escalate further.

Avneet Singh Marwah, CEO & Director, Super Plastronics Pvt Ltd, said: “There is expected to be a dramatic cut down in import of completely built-units for TVs in the coming days.” He added that already some companies which were importing CBUs have made commitments to begin producing in India.

 

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Published on June 18, 2020
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