Indian apparel brand vendors turn to local suppliers for procurement

The booming fashion market in India has prompted international brands to change their tactics and begin to purchase garments from local manufacturers to meet domestic demand.

Donna Karan New York (DKNY), Gant, Arrow, Marks & Spencer and other brands also use this method to avoid high import taxes, make products more competitive, and in some cases even establish additional procurement bases for their international operations. .

Ashesh Amin, president of garments and retail at SKNL Group, said that brands have learned that garments priced from US$7 to US$11 in retail stores in India would be unreasonable if imported from abroad, because high import taxes will devour profits. According to the complex formula for calculating taxes, some item taxes amount to 50%.

In May this year SKNL Group signed a licensing agreement for design, procurement and manufacturing, and distributed the full range of DKNY men's apparel to the global market outside of Japan. At present, all purchases of Indian smooth goods shops are conducted domestically, and retail prices cannot exceed the prices of adjacent rich markets by more than 15%, such as Singapore and Dubai.

The increase in the sales of retail outlets in India is a major driver of this wave of change towards local procurement. Until a few years ago, most of the international brands were not common in India, so the sales in India were also so small that there was no need to place orders in the country.

According to Central Statistics Office of India, during the fiscal year from April 2009 to March 2010, the retail market for textiles and clothing in India grew by 8.5%. Although the number is not large, brands are also sourcing in India. After the export to other markets.

The British brand Marks & Spencer and Reliance Retail's joint venture in India is an excellent example. They have 17 stores in India and their prices range from $2 to $75. It is estimated that the proportion of the company’s local procurement in India will soon rise from 40% to 70%. During the fiscal year of April 2009 to March 2010, the company purchased up to 175 million U.S. dollars from 42 Indian suppliers, including goods exported to foreign outlets.

Another factor in this wave of “Indian system” booming in international brands is the signing of franchise contracts with Indian partners. Most of the foreign brands in the lower-tier industries have only formed joint ventures with Indian manufacturers in the last two years. The contract they have signed requires that local manufacturers must import them completely from abroad in the first two years.

India’s Arvind Brands is responsible for marketing many international brands in India, including Gant, Izod, and Arrow. During the fiscal year from April 2009 to March 2010, the annual sales amounted to 120 million U.S. dollars, and a new one is currently being negotiated. Foreign brands, the brand will be purchased in India.

Arvind Brands said that as long as import taxes continue to exist, manufacturers will leave most of their purchases in India. Once import taxes are eliminated, manufacturers can choose to go to the best locations to purchase.