Garment exporters eyeing Indian retail sector

Garment exporters eyeing Indian retail sector
Business Standard, India
Tejal A Deshpande / Mumbai March 30, 2014

A growing domestic market and shrinking export margins are prompting Indian apparel and textile exporters to explore the opportunity within.
“Over the next five years, the distinction between the domestic manufacturer and exporter will fade, as the local market will be as big as the export market,” said Premal Udani, managing director, Kaytee Corporation, and former president, Clothing Manufacturers Association of India.

Over the next two years, Gokaldas Exports, India’s largest manufacturer and exporter of readymade garments, estimates its domestic operations to register a turnover of Rs 200 crore, a five-fold jump from its current Rs 30- 40 crore.

Rajendra Hinduja, executive director, Gokaldas Exports said, “The emergence of the organised retail has led to increase demand for the readymade garments in India. In the next two to three years, demand for the readymade garments in India is estimated to touch about $35 billion from $22 billion as of now.”

The garment exporters believe that their technological expertise and ability to deliver bigger volumes will provide them the crucial edge in the local markets. Also players expect a large business opportunity from private labels.

Udani said, “As big as companies foray into the organised retail, they will look at sourcing from exporters as they would be in a position to offer contemporary styling and an economy of scale to the buyers.”

Garment exporters have formed new domestic divisions to cater to the increasing local demand. “Though currently the volumes are small, the number is expected to increase significantly in the future. For instance, if we are supplying 500-1,000 pieces of a certain style in the domestic market, internationally the demand is in the range of 10,000-100,000 pieces,” said Udani.

Kaytee Corporation, which manufactures knitted garments already supplies to the local retail chains like Shoppers Stop, Pantaloons, and Globus and has recently completed its first order for Reliance Industries. Gokaldas Exports is also catering to the domestic demands of its international clients. The company supplies merchandise to international brands like Nike, Adidas, Reebok along with retailers like Metro Cash-and-Carry.

The company is also in talks with other big entrants like Aditya Birla group and Reliance Industries.

Analysts see a huge opportunity for exporters in price-sensitive markets like tier-II towns. “The trend of exporters sourcing for the retail chains is likely to benefit tier-II and smaller cities, which are witnessing the emergence of the organised retail. Internationally, the exporters sell products in the range of $2 (Rs 88)-$7 (Rs 308). They can get better margins in the domestic market by offering similar quality of products,” said an analyst.