Fashion biggies buy India's garment story

BANGALORE: An appreciating rupee isn’t deterring global fashion biggies from reposing their faith in India’s garment story. Just as the currency blues impact India’s $9 billion worth garment exports, apparel giants like Diesel and Hugo Boss and Liz Claiborne are seen stepping up their sourcing from the country. Diesel’s wholly-owned sourcing subsidiary K-Bit has set up a domestic arm located at Chennai to increase its exposure in the Indian market.Another global peer Hugo Boss is reportedly considering a foray into India’s apparel sourcing industry and has had discussions with several suppliers, including Madura Garments and Hyderabad-based Pokarna Fashions, sources said. Liz Claiborne, which has a relatively small sourcing base for its Mexx brand in Bangalore, is likely to expand operations to cover other group brands in the next six months, sources added.According to industry observers, the move by Hugo Boss, Diesel and Liz Claiborne, amongst the world’s cutting edge fashion brands, is a significant step towards India’s emergence as a value-added garment exporter. In fact, Italian fashion powerhouse Diesel has split its Asian sourcing operations, hitherto headquarters in Hong Kong, in a bid to focus independently on India.Speculation is also rife that Hugo Boss, which has conducted several field visits in recent months, could look at setting up an export unit in the country even though many industry observers remain sceptical about it. Interestingly, till a few years back Hugo Boss had vehemently ruled out looking at India owing to domestic labour issues.Diesel, which currently sources garments worth roughly $18-25 million from India, is looking at hiking its India exposure in the non-denim business. The Chennai-based sourcing management company Fifth Avenue, which has been associated with Diesel’s domestic sourcing, will continue to assist the Italian brand’s efforts to scale up operations, sources added. Diesel, which produces its mainstay denim only in Italy, is currently sourcing garments worth $80 million from Asia, and mostly from China.And there are more international brands queuing up for sourcing from India, either through vendors or through wholly-owned units. German kidswear brand Kanz, Ireland’s biggest linen manufacturer Baird McNutt and Finnish textile major Ahlstorm are buying into the India garment story at a time when value / volume clients like UK’s department store chain Next Plc are re-looking at the viability of India sourcing owing to a volatile currency.India is likely to attract a lot of top end players who are not into currency play. A super-premium European brand will see value in India’s artisanal quality and will absorb a spike in currency. There are brands out there with a belief that probably only India would be able to replace the level of garmenting sophistication seen in a European market like Italy, for instance, says Darshan Mehta, CEO of Reliance Brands Pvt Ltd, and an apparel industry veteran.The ongoing garment industry churn fuelled by the rising rupee, which has seen order flow drop as US-based volume players flee, has freed up a lot of quality manufacturing capacity in India. Kanz, for instance, along with its local retail partner is scouting for a manufacturing base in Tirupur, which has seen the volume business drop significantly in recent months. Garment exports from India are likely to remain flat in rupee terms, though it could grow at around 10-12% when measured in US dollars.Further, the financial incentives unfurled in SEZs, and a nagging fear that China could turn dearer in the near future, is also aiding the move by international brands to consider an export base in India. The concerns on China mainly centre around a possible spike in labour costs, withdrawal of government subsidies, or even a possible correction in the long depressed yuan. The entry of Irish linen maker Baird McNutt, European intimate wear brand Triumph and Finland’s Ahlstorm should be seen in this context.Apparel Export Promotion Council of India director Vijay Malhotra said that Andhra Pradesh and Tamil Nadu are emerging as the most attractive states for foreign firms. They are mostly looking at setting up base in upcoming SEZs and this is mainly because of the incentives they are getting from the state governments,he adds.Major Sri Lankan exporters like Brandix and Continental Fashions have already re-located or expanded their operations in India, mostly in these two states. An added attraction for some of these international players may be the emergence of the domestic retail market. A brand like Kanz would find it imperative to develop a local manufacturing footprint as it taps the local market, besides making Tirupur an export hub.



source: http://indianexportnews.blogspot.com/