India Suppliers Adapt to Change
December 3, 2007-- Home Textiles Today,
Five days into a whirlwind trip around India's home textiles hubs, three topics have come up early in conversation. Executives are collectively concerned about the valuation of the rupee against the dollar, the state of the U.S. economy, and the attendant rush of investment dollars into India.
Worse, when the dollar does manage to rebound, the days when rupees were delectably cheap appear to be over. India's finance minister has stated that the government has no problem with a strong rupee, and he recently warned exporters to adjust their businesses accordingly.
For the A-listers, the strategy at hand is what one eloquently termed "sustainability." Yes, they're going to pursue market share, but within the parameters of securing sustainable business that doesn't wreck the bottom line. And yes, everyone I spoke with recognizes that margins will continue to be quite low for some time.
Second-tier manufacturers that aren't fully vertical are grappling with retailer demands that they become so — not an undertaking everyone wants to make in the current climate. But I was surprised to find how many of them still manage to do business with wholesalers and retailers simultaneously.
The idea of a third tier of ambitious manufacturers building out aggressively to join the second tier seems unlikely for the foreseeable future. Most execs I spoke with anticipate a period of consolidation, with some small mergers related to backward or forward integration as well as plant closures for inefficient operators.
While many manufacturers are looking forward to serving India's growing middle class, it isn't quite there yet — at least in comparison to the $24.7 billion U.S. market in home textiles. India's home textiles sector was $4 billion last year, according to India's Cotton Textile Export Promotion Council (Texprocil).
But there are encouraging developments. Home loans are exploding in India, and the home textiles sector is expected to grow by 13% over the next five years or so. Texprocil is working on branding initiatives for the country's long-staple fiber crop. Further, the government is examining several potential initiatives to encourage home textiles manufacturers to make investments that will spur innovation, according to India's Secretary of Textiles, A.K. Singh.
Singh was among many speakers at last week's Home Fashion India Week conference in Mumbai to stress the need to focus on innovation in the face of a sluggish U.S. market. (As did I.) That's sound advice for everyone, everywhere.
Related Content By Author
Industry Related Content
Countdown to Intertextile Shanghai