Global brands like Marks & Spencer, Next, Decathlon, Primark, GAP, Walmart, Pepco, and Tesco are planning to ramp up sourcing from India, industry executives told ET.

Export orders had dwindled in Tiruppur in the last three years as two major buyers, the US and Europe, reduced their purchases following the recession caused due to the pandemic and Russia-Ukraine war.

Further, the customs duty changes in the Union budget are likely to give a major fillip to Tiruppur, a textile production hub in Tamil Nadu. Tiruppur is already facing a wave of orders with some global brands diverting purchases from Bangladesh with production getting impacted there due to social unrest.

Brands who may have origins in other countries but have a presence in Australia like Kmart and Target, too are buying large volumes of garments from Tiruppur to take advantage of the India-Australia Free Trade Agreement, said KM Subramanian, president of Tiruppur Exporters Association (TEA). Also, Australian brands like BIG W and Woolworth are placing orders after the FTA.

Subramanian said all the global brands have done social auditing of the factories before placing orders. "They have looked into the living conditions of the workers and how green the factories are. Based on their assessments, they have placed orders with Tiruppur. Next, Decathlon and Polish brand Pepco are all sourcing from Tiruppur," he said.

Subramanian said global buyers are finding India as a more stable sourcing country compared to others like Bangladesh. "So, more orders have started to pour into Tiruppur. We expect more orders to get diverted from the neighbouring nation," he said referring to Bangladesh.

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The budget scrapped or lowered import duties on certain raw materials used in the fashion industry but only when they are exported as finished products from India.

The leather business also got an impetus in the budget. P Rajasekaran, business head, finished leather business at Tata International, said, "The import duty waiver by the government on the export of shoes and leather goods is expected to significantly increase exports of Indian leather products. We are witnessing a rise in demand for sustainable/bio leather products from global brands, and there is increased interest from key markets such as the US, China, and Europe. To meet this growing demand, we aim to boost the production of sustainable leather at Tata International manufacturing units to 50% within the next four years."

"India is a crucial market for H&M, both in terms of sourcing and our customer base. While we do not disclose sourcing figures by country for competitive reasons, we are closely monitoring the recent reduction in customs duty on raw materials and its potential benefits. Our focus remains on our long-term sustainability goals, aiming for 100% of our materials in commercial goods to be either recycled or sustainably sourced by 2030, while supporting local industries and suppliers," said Yanira Ramirez, country sales manager at H&M India.

Primark said, "Our understanding is that the list of products on which customs duties are to be reduced does not include textile raw materials and, therefore, will not affect us. We welcome progress in this space, including the negotiation of free trade agreements, as we're always reviewing new opportunities to enhance and evolve our supply chain and sourcing strategy."

Next, GAP, Decathlon, and Zara did not respond to ET's queries.

Subramanian said exports from Tiruppur are likely to increase by 10% this fiscal following the fresh orders. In FY24, the garments hub had clocked a revenue of ?33,500 crore. There are close to 6,000 knitwear and knitwear-accessory units in Tiruppur.

Published on: 31st July 2024

Source: The Economic Times