Footwear industry: Brand India has more credibility than Brand China
Arvind Soneja, Honorary General Secretary, Indian Footwear Components Manufacturer’s Association, opines that in order to make the Indian footwear industry self-reliant, domestic footwear components should be promoted. He also firmly believes that the industry must scale up production to promote Brand India abroad.
IBT: What impact has COVID-19 had on domestic and international sales of footwear made in India over the last 3-4 months? How is this expected to impact growth in the coming years?
Arvind Soneja: The impact of COVID-19 has been very distressing for the country. International sales are virtually nil as our clients themselves are in a bad shape; especially from UK, US and European countries put together. The domestic scenario is equally disturbed as most of the business centres are severely affected with very low retail sales and due to several restrictions and risk to production units and the work force, the production is very low. The industry should recover in six to eight months, once the country is on the path of recovery from this pandemic.
IBT: Indian footwear industry is heavily dependent on raw materials imported from China. How can this import dependency be minimised?
Arvind Soneja: As the footwear component industry is the backbone of footwear manufacturing in India, it should be the key focus area. We have been presenting data to the government indicating the kind of loss & downturn that our footwear components sector has been facing. The import dependency can be minimised by promoting the domestic industry in several ways:
a) By scrapping Duty Free import schemes which footwear exporters normally misuse by importing substandard products and flushing the domestic market with cheap options. The country bleeds of its valuable foreign exchange with no revenue as duty and the domestic industry also takes a hit due to that.
b) Technology transfer has to be incentivised, so that the domestic industry is prompted to invest and make world class products.
c) For products where the footwear industry is solely dependent on imports, the first 5 units should be given a capital subsidy of 50% of the investment upon commencing production.
d) Component sector specific capital subsidy scheme should be designed as the current scheme under IDLS does not help component sector due to the unrealistic conditions attached to it.
As it appears, that the Government is putting its might to help the industry and we are hopeful of coming back to normalcy in the next 3-4 months.
IBT: Now that different countries, including India, are gradually opening up their economies and borders, how are the markets responding? What are the challenges you face?
Arvind Soneja: As per our observation, the demand all over is low & slow. Buyers tend to cancel their orders to a great extent. There is an acute pressure on the inventory front as the Summer 2020 season is totally lost and ready inventories might be sold at a huge discount or scrapped.
The challenges are endless, our major task is to bounce back and shake up the economy in fuelling the growth of markets all around. But we have to wait till we get over with COVID-19 repercussions. Gradually the shape of market, which is fluid at this moment, will improve.
IBT: How is India competitively placed in the global footwear market, and what does the industry need to do to raise its global stature and move up the value chain?
Arvind Soneja: Indian manufacturers are not keeping any stone unturned to keep up the work process. However, matching up with China and becoming the global leader in the footwear industry is not possible at the moment. But yes, we can grow our share. In the post-COVID scenario, China is going to lose its share in the footwear market. This will create an opportunity for other countries to gain from this situation. Countries in the race for this market share include emerging footwear manufacturing hubs like Bangladesh, Vietnam, Indonesia & African countries.
Speaking from the viewpoint of footwear component manufacturers, if you have to increase the share of your sales, then you have to make your presence felt in all these markets. One strategy that India could adopt to attain this objective is to participate in buyer-seller meets. For example, Bangladesh organises an annual fair for footwear industry in which many Indians take part. In India, IFCOMA organises numerous fairs for the footwear industry – both within the country and overseas.
But at the same time we need support from the govt in giving our sector much needed exposure to the new international market which has potential for our sector. For instance, in case of these BSMS, there are costs like travelling, booking, shipping samples and meeting people. If the government subsidises these BSMs, the industry’s presence will be more noticeable.
Brand India concept has to be given emphasis and the industry needs to be taken into confidence as at present, SME units need hand holding support from the government. If you compare Brand India with Brand China, our credibility is much more. However, our outreach is very less. In terms of value, if China thinks of 10 lakh pairs, we would think of 20,000 or 30,000 pairs. When we market Brand India more aggressively, we would churn out more numbers of footwear pairs & automatically, our production capacity will also improve. Consequently, your investments in new technology would also increase.
Another thing is that there should be a survey of the footwear components industry. China has been flooding the market with cheaper footwear components and shoes. Most of them come to India as undervalued products. So, duty is saved on that. Plus, the government has imposed many duty-free import schemes, which exporters benefit from. They can import substandard undervalued Chinese products and sell them to the local traders, which disturbs the market. If we undertake a survey of what all is being imported and manufactured in India, you can easily find out how we can counter the imports from China.
IBT: How do you view market sentiment and global trade dynamics in the post-COVID period? How do you see the consumer sentiment evolve and what will be the defining trends?
Arvind Soneja: The post-COVID situation would have quite a few uncertainties. The market scenario will evolve in the next 3-4 months. May be we will see new markets like Bangladesh, Vietnam, Indonesia & African countries emerge post-COVID. It depends on which countries are able to tide over the crisis.
As far as the consumer trends are concerned, these keep changing every two years. So, some times more sporty look would be in vogue; while at other times more formal shoes would be sold. My experience in the industry has lasted over 30 years, and based on that I can say that post-COVID, some markets will be affected while some will not be as significantly hurt. So, if our customers are hurt, it would definitely have repercussions for us.
Arvind Soneja is the Honorary General Secretary of Indian Footwear Components Manufacturer’s Association. He is also the MD and CEO of Uttam Polyrubs. With over 30 years of experience in the manufacturing sector, he has been personally responsible for diversifying the business portfolio of Uttam Polyrubs, while at the same time spearheading an aggressive expansion strategy of the firm. Under his leadership, Uttam Polyrubs has grown and achieved new heights, not only as a successful business organization, but also as a benchmark for quality and innovation driven practices.