Apparel Online India Magazine December 1st Issue 2018 | Page 19

LEAD STORY
“We have
gone through a
difficult period
in the last three
years but this
is the best time
for business to
flourish in India.
The Government
support is
forthcoming and
we are expecting
some steps
on embedded
taxes which
are not being
reembraced.
Limited support
due to the
currency is also
in our favour. The
problem with
US and China
relations, and
the subsequent
clash seems
to be in India’s
favour. India
has a fantastic
opportunity to
grab business
from this
situation. So,
next three to
five years are
going to be very
good for Indian
exporters.”
– Gautam Nair
“If you keep
running to a
low-cost area,
where will they
go after five
years? The same
is happening
in Ethiopia. We
spent a month
over there and
everything was
done from our
side. Then we saw
the ground reality.
Export might
rise there but to
survive there, the
factory must have
at least Rs. 1,000
crore turnover...”
Governments in their effort to attract
investment in the textile and garment
sector, the same is also being provided
by many overseas Governments.
Further, workers in many of the
chosen destinations are having much
higher productivity compared to
Indian workers. Along with duty-free
entry to core markets, many of the
countries also offer the edge of duty-
free import of critical raw materials,
mostly fabrics that attract heavy duty
in India. “When we talk about chief
value synthetic fabric or garments
made by CVS fabric, duty in India is
between 27 to 32 per cent, which is a
significant saving if one is producing
in Jordan,” reasoned Gautam.
First Steps Babywear, a leading
exporter of kidswear based in
Bangalore, is another company
expanding its horizon to an
established destination – Sri Lanka,
mainly for its advantage of duty-free
entry into both the US and EU and
duty drawback that the Government
provides to encourage exports.
While the Trump Administration has
extended the US GSP Scheme until
31 December 2020, the GSP+ scheme
for the EU has been reinstated with
conditions mostly related to human
rights violations, till 2021. Richard
D’souza, Director of Projects
and CMD First Steps Babywear,
informed, “We chose Sri Lanka as our
next manufacturing base, not only
because of duty-free access, but also
to get the duty drawback benefit. As
Sri Lanka is offering 10 per cent duty
drawback, this will help us to be very
competitive. At the initial stage, the
target is to produce 0.5 million pieces
per month in Sri Lanka, while within
a year, it will be more than double, as
the target is to manufacture 12 million
per annum.” The Sri Lankan initiative
by First Steps Babywear is a result of
a recently drafted joint venture with
Sisalu Fashions.
Though production in Sri Lanka
is in reality 15 to 20 per cent more
expensive than India, mainly due to
higher labour cost, quality rejection is
comparatively less there as they boast
of skilled operators in the country.
This is also one of the main reasons
for First Steps Babywear to set up
its units in Sri Lanka. Proximity with
head office and its other units and
similar language (Tamil) are also
added advantages of Sri Lanka to
the company.
– Rajat Kumar
Rajat Kumar (R) CEO, with his son Karan Jain, Director,
Pooja International, Noida
Proximity is indeed an
essential benefit
In case of Jordan, another major
factor that sealed the deal for Matrix
Clothing was the shorter sailing time
to key markets, especially since fast-
fashion is now a norm. The port that
the company uses in Jordan takes
only 14 days as the time to sail from
Jordan to East Coast of US. So even
for quick response, Jordan makes
good sense. Lying amidst the region
of comparative instability with major
clashes such as Syria, Iraq, Saudi
Arabia, Israel… Jordan is peaceful
and stable and so it made sense for
Matrix Clothing to manufacture in
Jordan for the US market. The factory
that the company has bought over
was already producing apparels for
Nygard International, having 400
stores across Canada and the US
and strongly present in over 6,000
department stores through the shop-
in-shop concept, worldwide along
with online store. Apart from the
continuation of work with Nygard
International, Matrix Clothing has
also started supplying apparels to
GAP. Very soon, the company will add
two or three more buyers.
Production capability
strengths, a
consideration...
Indian exporters are not only going
abroad for new expansions, but are
even expanding existing units as
their experience has been good. A
case in point is that of Modelama
Exports. Producing mainly outerwear,
Modelama Exports, another well-
known apparel exporter of Gurgaon,
recently expanded its overseas
operations by adding 400 machines in
Tanjung Emas, Semarang, a port city
on the north coast of Java, Indonesia.
The company had entered Indonesia
almost five years ago and had 450
machines there. Its production in
Indonesia is for mainly Ann Taylor
(Ascena Retail Group) and Calvin
Klein (PVH). The company had
registered a turnover of more than
Rs. 125 crore in last fiscal, exclusively
from its Indonesian operations.
The reasons for its satisfactory growth
are many. The official approvals are
quite fast in Indonesia and land price
is also comparatively less to India.
Even productivity of workers is higher
there as compared to Indian sewing
operators. Sharing the benefits of
having a unit in Indonesia, Lalit
Gulati, MD, Modelama Exports,
Gurgaon informed: “By having a
unit in Indonesia, we can compete
with Bangladesh and other similar
competitors because productivity is
quite higher in Indonesia. We want
to grow there as we can’t do volume-
based business in India, as it is too
expensive. So, we have to have a base
in a place like Indonesia where the
price advantage is clear, as we don’t
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