STATES LAY OUT A RED CARPET FOR APPAREL MSMEs

Support by various State Governments to the Apparel sector

(AN ARTICLE WRITTEN FOR CHAIRMAN, AEPC FOR ET RISE)

Employment is the key to transforming a community. State Governments have now realized the enormous potential of the Apparel sector to create jobs and empower women. They have been quick to take action and create an investor friendly policy direction and environment to entice those interested in striking or spreading roots on their soil. This presents a rare opportunity for MSME Entrepreneurs to set up or expand their manufacturing facility.

Recent reforms in the country have made it clear that the role of the State stands redefined. With the transformed role of the Government, from a mere monitoring agency to collaborators and partners in growth, the climate could not be friendlier for any MSME looking to grow.

Research and records have established the high potential of the Apparel sector to create about 70 jobs for every Crore rupees invested, much higher than the other manufacturing sectors. As high as Rs. 26000 Crores are given out as salaries and wages every year by this industry. The most significant advantage lies in the high employability of women in this sector at every level- from a sewing machine operator to the CEO of a brand. While the Ministry of Textiles has left no stone unturned to support the sector at the national level, the State governments have laid out extensive policies to dole out further benefits for entrepreneurs and brands.

It has also been well understood that ease of doing business is the single most important window to a world of opportunities and growth. Apart from providing incentives in kind and financial benefits to entrepreneurs, each state government has put in focussed effort to reduce cumbersome documentation in the process of starting something new. On this metamorphic journey from red tape to red carpet, well appointed single points of contact have been created for understanding of policies and availing the benefits. While the going may be still difficult in some lands, others have made drastic efforts to improve the processes involved. I will discuss about the positive support extended by some State governments here, in particular and a few salient features of their respective policies.

The states which have constituted special policies for significant benefit of Apparel manufacturers include Chhatisgarh, Gujarat, Jharkhand, Karnataka, Orrisa, Uttar Pradesh and West Bengal. Other states, like Uttarakhand and Telangana, have also been proactively working on wooing the Apparel manufacturers to their land. There is a common myth about such policies being friendly only for those with deep pockets, however, i would like to differ on this and clarify that the pre conditions and barriers have been lowered and set suitably.

Chhattisgarh , a young state, formed in 2000, has been quick to accelerate its process of industrialization, realising its importance in creation of livelihoods and a consequent better life for it’s people. Chhattisgarh has been declared one of the best fiscally managed states by the Reserve bank of India- which speaks a lot about the ease of doing business in the state. It has become a hotbed for Startups across a variety of sectors from IT to power and medicine. Eighteen years young a state, it provides an obvious advantage of being the first mover and capturing the domestic markets as well. The state boasts of a very rich labour pool and it is important for an Entrepreneur to know that Chhattisgarh has one of the lowest reported loss of man- days attributed to labour problems, in the country. Due to rich resources of coal, it is one of the few power surplus states of the country. The state is one of the leading producers of Tussar and Kosa Silk in the country. An Apparel park is being established in a huge area of 4 hectares near Raipur. The state government has extended many investor friendly benefits – it will reimburse 50% of the amount spent on new and existing Micro, Small, Medium, Large industries and Mega projects established by the entrepreneurs, subject to conditions. Exemption is also given on entry tax and land acquisition/ leasing to eligible Manufacturers and MSMEs. There is a subsidy on loan interest and benefit on Quality certification and Patent registration as well. Not only will the state provide exemption/ concession on allotment of land in industrial parks, but, also a full exemption on electricity duty for the first many years. For complete details one must visit https://industries.cg.gov.in/pdf/policy2014-19/Industrial%20Policy%202014-19%20Translated%2012Feb2016.pdf. According to DIPP, Gujarat is the second preferred investment destination in India. One of the most developed states industrially, Gujarat has a world class infrastructure with 42 ports and 19 airports.  Gujarat is the largest denim producer in India and third in the world. The state government has introduced a textile policy with various schemes to provide assistance in the form of Interest subsidy, power tariff and VAT exemption. The government provides great support both in acquisition and upgradation. There is a lot of government interest in technical textiles. Assistance is provided for energy conservation, water conservation and environmental compliance to manufacturing units. Rent assistance/ shed on rent and assistance for building dormitories for workers is provided. The state Government also provides for 50% of the worker wages per month, for a period of 5 years, as payroll assistance to new enterprises. It may be wise to go to https://ic.gujarat.gov.in/documents/news/17-10-2017-14-08-23gujarat-garment-apparel-policy-20172-new-17102017.pdf

Employment is the key to transforming a community. State Governments have now realized the enormous potential of the Apparel sector to create jobs and empower women. They have been quick to take action and create an investor friendly policy direction and environment to entice those interested in striking or spreading roots on their soil. This presents a rare opportunity for MSME Entrepreneurs to set up or expand their manufacturing facility.

PRODUCT INNOVATION- THE KEY TO GROWTH FOR INDIAN APPAREL

User and Market centric Innovation

(AN ARTICLE WRITTEN FOR CHAIRMAN, AEPC FOR ET RISE)

Product innovation, rather than process innovation may be a great starter for small enterprises setting their first footstep into garment exports. Product Innovation in Fashion is today an intersection of statistics, technology, trends, material, and aesthetics rather than a mere outcome of trends and preferences.

Shoppers today have become very mindful of conscious consumerism. There is a clear interest among the consumers now, towards consuming everything, including clothing, with responsibility. Brands and in turn, manufacturers, cannot afford to ignore this and must work to provide convenient solutions within these new parameters. As a result, Circularity, Sustainability and Traceability are fast becoming the guiding principles of innovating and manufacturing clothing. It is not necessarily about what you make, a lot of times it is about how you make, that now matters!

This is more easily said than done- However, it may be wise to embark on your journey in the correct direction right at start, albeit slow! Businesses which adopt this ideology, when small, will find it far easier to grow into them than those which attempt the transition at a mature age. For an established organization, while the finances involved will certainly be steep, the challenge to transition work habits of those involved will probably be steeper!

Having set these as the principles of manufacturing, there are many other elements that should be given due significance in product innovation. The primary factors that should drive Product innovation in apparel, in my opinion, may be listed as below-

• Your target market- Identify the specific country you intend to export to and are manufacturing/designing for. It may help to know that the top Ready Made Garments (RMG) export destinations for India are the United States followed by United Arab Emirates, United Kingdom, Germany, Spain and France (not considering European Union as a single destination). While India’s share in imports of these countries has more or less been rising, except UAE, over the past few years, Netherlands and Italy also have been very welcoming for India made RMG. What may be of deeper interest to MSMEs are the markets of Denmark, Japan, Australia, Republic of Tanzania or Mexico- countries which hold huge potential for the Indian Ready Made Garment ( RMG) manufacturer and exporter. There may be more merit in reaching out to these new lands and striking roots here.

The Ministry of Commerce, Government of India, has been tirelessly working to support the industry with a favourable international environment for trade and business. India has a Comprehensive Economic Partnership Agreement (CEPA) with Japan which provides exporters with zero duty access in Japanese markets. The India-Singapore Comprehensive Economic Cooperation Agreement (CECA) gives a similar favourable positioning to Indian RMG imports in Singapore. Korea, Chile and Malaysia are also very suitable lands for MSMEs and beginners to explore in the backdrop of their trade agreements with India. Among the many advantages of exporting to these countries, the foremost is the landing price advantage for Buyers in buying Indian garments and the consequent preference for India as a sourcing destination.

A detailed understanding of your Buyer and End- User in the target market is imperative. The preferences of your user in terms of garment circularity( cradle to cradle), silhouette, material, colour, surface and finish should be analysed well- A first hand market survey and few international trend forecast agencies may be able to assist you in decoding these preferences.

• Your competition- It may be wise to know your competition well and the edge other manufacturing nations have over yours- the landing duties or benefits for goods from your country vis a vis other exporting countries like Bangladesh, Vietnam, Sri Lanka etc and the latest trade statistics between the nations. In recent times, certain product categories have been vacated by China and this has presented a huge opportunity for India to strengthen its foothold as an exporter. Tracking such international movements in global market and exploiting suitable opportunities can impact your business very positively.

• Scope of continued business growth– A research into the scope of growth within the product category you are exploring will also be very beneficial. Apparel Export Promotion Council can provide great support in this decision making through reliable market reports and statistics. The product categories in which India has a significant presence on the global export market, along with their HS(Harmonized System)  codes, include the following:

• Your strengths– Make what your people can make- An honest assessment of the materials and skills available helps make wise choices in curating the product basket you can offer to your Buyer. While this is in no way an attempt to discourage experimentation, it is an advice to exercise one’s intelligence and business acumen before entering a product. It is no news to anyone in this domain, that Indian manufacturers have always enjoyed a strong position in production of cotton spring- summer garments over manmade fabric autumn- winter wear- a decision more driven by availability and cost of raw materials and skill experience of labour than by market demand. 

Marks and Spencer, the leading global apparel brand is one of our most important buyers. During one of our recent conversations over coffee, said Nidhi Dua, Country Manager (Sourcing), Marks & Spencer India Pvt Ltd.,“ Product innovation is a continuous process and is key to gaining competitive advantage and creating value for the customers. Product innovation can be used to enhance the functionality, performance and appearance of a product, as well as improving cost viability or making it more environmentally friendly. Innovation helps companies to differentiate their product from others in the market, thereby winning the hearts of the customers and building a strong foundation for growth and profitability.”

That sums it up all very well.