Increasingly, as the industry becomes unsure about the market conditions and is looking at another uncertain year of business, there is one man who thinks completely otherwise, firmly confident that the industry is at the threshold of major growth. In conversation with Apparel Online, Sudhir Dhingra, Chairman and Managing Director, Orient Craft Limited, shares his observations about the Indian industry that is noticeably moving, showing upwards growth due to industry-friendly Government policies and evolving market conditions.
With restricted consumer spending on garments, shoppers’ continuously demanding customized products, and price pressure, besides increased production cost, the uncertainty for the apparel industry and its supply chain is adding up. In fact, the year is shaping up to be another challenging year, as the strengthening of the US dollar and the volatility in commodities cost is giving jitters to many in the Indian apparel industry. But on the contrary Dhingra opines, “Indian industry should be rejoicing that the dollar is going to hit 70 this year, and whatever inefficiency the Indian industry has, the dollar is helping them to fill the gap. People keep on crying, but I do not believe in that. The fact is that the industry for the past few months is actually becoming vibrant like the rainy season.”
Dhingra does however admit that though the opportunities are huge for the industry, challenges still persist. “Price points are still very tight and the expectations of the customer in terms of service and quality are very high, but why shouldn’t it be…? Why should you expect them to buy poor quality products in comparison to products that they can get from Sri Lanka, China, etc.? I firmly advocate that there has never been a better time for the industry and this is not because of the scenarios which are still very fearful, but it is because of the change at the top, as all the things that one wanted to talk to about the Government was never heard before, but now they are willing to listen,” avers Dhingra.
Many have been speaking loudly for reforms in the industry as the Government is now listening, but the bigger picture is not restricted to reforms, rather it is about the industry becoming more and more quality-conscious to compete with other players. “People have been chasing for duty-drawback, I think it is important but small compared to the larger picture. Bigger picture is that we have a huge challenge in the face of Bangladesh, Cambodia, Vietnam, etc. that are producing higher quantities and also enjoy certain advantages that enables them to be better players in the market,” claims Dhingra.
As the Government is taking notice of the apparel industry, there is a dire need to also look at core issues like jobs, which has been the bone of contention for many Governments, the recent being the Jat stir in Haryana. “Today every State and Central Government has become acutely aware that if they fail to provide jobs particularly for the class of people that we employ, uneducated, unskilled women in particular, they will not be able to survive. What is happening in the North East, where Marxist have become popular because they give Rs. 1,000 every month and a gun, it is all about engaging young people in the right way,” argues Dhingra. History shows that many countries have established garmenting as a trade that has been used to create mass employment and aid development, including the now developed nations like the US and UK. The same route is today being taken by countries like Bangladesh, wherein their economy is heavily dependent on garmenting industry for growth.
With the coming of the Modi Government, industry is looking towards a positive outlook of growth as the Government is also involving the industry, taking their opinions while introducing new policies; Dhingra has even not hesitated to take a forceful and vocal stand at all forums. “I championed strongly for Free Trade Agreements (FTA) during the ‘Make in India’ conference in Mumbai recently to ensure that we have a level playing field. There is internal expectation that within current year the FTA with Europe would be signed and the many ‘merchants of doom’ would have to eat a humble pie. The day it is signed, they would run out of capacity! A business which is currently US $ 8-9 billion will grow 100% year-on-year for the next three years. There has never been a better time because at least today we are in the minds of the policy makers! Once FTA is signed, then see the magic,” asserts Dhingra.
With signing of the FTA with Europe, many are hopeful of large chunks of business which is currently being held by countries such as Bangladesh, coming to India. “The moment the agreement is signed I will add 25% capacity within six months,” adds Dhingra, predicting that 2017 will be a year of boom. Once the FTA is in place, he feels that the Government needs to look at bilateral agreements with the US and Canada, as the world wants to do business with us today and our biggest markets are still the western markets of the US and Europe. “Everybody’s talking that we don’t have good processing facilities, which is right; also that the duties on manmade fibres is high, which is also right but I believe these are all health pills and unfortunately we have cancer. How are we going to fight 29% duty disadvantage when the customer is chasing 50 or 25 cents? But now the awareness is coming, it will further accelerate,” states Dhingra confidently.
Further to the FT Agreement, Dhingra has also proposed for tax reforms that could not only support expansion but also generate jobs. In lieu of an industry player providing 500 jobs, Dhingra suggests a tax holiday for a year and if it is 5,000 jobs then the same should be for 10 years. “People will happily expand…; the same could be linked to NREGA, so that the taxpayer money is also saved. Now the Government is in an uncomfortable position as they know what is happening in the North (agitations) can happen anywhere else. At the end of the day the Government has restricted jobs, they have to create opportunities. I think good times are around the corner, it requires more aggressive lobbying from the industry so that we are the ones who can suggest to them how to do it and what will be the benefits,” opines Dhingra.
Many are not aware that the Haryana Government has already provided a vision in the industrial policy claiming that for every ‘Haryanvi’ that is employed, the Government will compensate Rs. 3,000 to the employer. To lure in many of these untouched labour belts, Orient Craft had set up a centre in Rohtak which saw positive response, one such being many women coming in for the training and then moving to Gurgaon to take up jobs in the factory. It its initiatives such as these that will embark for a better India not just in terms of the industry growth but also in terms of the country’s economic growth with the bigger objective of women empowerment being realized. “More and more State Governments are coming up with specific policies for the garment industry and the very fact that they are luring the industry, highlights the new mindset. It is now for the industry to move out of its comfort zone and explore new options. Only those industry players will survive who change with time,” reasons Dhingra.
Meanwhile, Orient Craft on its part is also looking towards growth. The Green Factory in Rajasthan is running to capacity and is earning profits for the company with dedicated labour force. This factory caters to 30% garments and 50% furnishings while the rest is for lace making, embroidery and also catering to a large wash plant. “We are going for further expansion next year. Our denim plant is also doing very well and we are booked to capacity. We have added sweater manufacturing to our factory in Manesar,” reveals Dhingra. Looking towards 25% expansion as and when the FT Agreement will come into place, Orient Craft is sure for a positive 2016, and more importantly Dhingra is happy with the way the industry is moving!
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