MADRAS, India — India’s leather garment in-dustry is coming of age, its products turning up in Europe and the U.S., carrying prominent fashion labels.
Spearheading this drive is a gradually lengthening list of fast-paced and market-driven companies whose owner/managers are intent on reversing India’s generally held reputation for uneven quality, horrific deliveries and lackadaisical problem-solving.
Since 1991, their efforts have been further spurred by timely liberalization policies permitting hassle-free importation of the latest in technology and machinery. Carefully overseeing operations, in-house Italian and German technicians are also common sights.
The figures attest to their joint success. From a modest 74 million rupees — or about $2.4 million at current exchange rates — in fiscal 1982-’83, followed by five subsequent years of relatively slow growth, exports began taking off in 1989-’90, exploding to about $311.6 million (9.7 billion rupees) for 1992-’93.
Garments represent about 26 percent of the country’s total $1.2 billion in leather exports, the rest comprised of 22 percent finished leather, 14 percent shoes, 18 percent shoe uppers and 20 percent small leather goods. Indian goat suede, napa sheep and buffalo are highly prized for garments, with others imported according to buyers’ specifications.
One major stop on a leather garment buying tour is Namaste, consistently the country’s leading leather garment exporter. Begun 20 years ago by the husband-and-wife team of K. Narayana and Madhura Bhat, the Bangalore-based operations in southern India today boast 35 production units employing more than 5,000 workers. Last year, the firm posted $35 million in exports.
The exporters’ son Vikas Bhat, the company’s executive director, attributes the firm’s strength to its tanning facilities.
“Whatever we earned in the past 10 years has been reinvested in the tanneries,” he said.
Namaste now has seven modern tanneries located in the heart of southern India’s tanning belt, a 200-mile stretch linking Bangalore and Madras, capable of processing more than 1.5 million square feet of leather per month.
While currently producing 25,000 jackets monthly, Namaste also makes leather goods, shoe uppers and is about to launch a women’s shoe plant. Americans are also catching on to Namaste’s capabilities, long a secret of European buyers.
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“We’ve only begun getting U.S. buyers since last year,” said Bhat. “They’re shocked at how modern our latest shoe factory is.”
Seen in production at the plant was a long suede waistcoat with Chinese piping for Elisabeth, a Liz Claiborne company. A luxurious quilted goat-suede padded parka with stand-up collar for Gerry Weber of Germany costs about $100 CIF (cost of goods, plus insurance and freight). Minimums are 300 garments per color per style; production time is 90 days, with all goods shipped by air.
With the global economy still less than healthy, Bhat does admit to overall price resistance.
“Luckily, although U.S. buyers are very price-conscious, they are not as particular as the Germans about minor defects in the leather and we are still able to do business,” he said.
Cosmos Leather Exports, also of Bangalore, is a prime example of the new entrepreneurial spirit now sweeping India. Originally a successful watchcase manufacturing company, Cosmos decided to diversify into leather two years ago and already claims an impressive European client list, including Germany’s Ouiset.
“We decided to learn the trade to the highest standards first,” said S.B. Shetty, chairman of the publicly listed company. “After that, we felt we could enter any market.”
Cosmos recently negotiated its first major order with Kenneth Cole and this year’s volume is expected to double the $3.5 million registered for 1993-’94.
[In New York, an executive of Campaign Success, the licensee for Kenneth Cole women’s outerwear, confirmed that Cosmos is producing pieces for the fall collection and is a new resource for the two-year-old licensing program.]
Main material to date is supple goat suede. Ouiset’s in-production program includes a three-quarter-sleeve shirtjacket with a punched-out eyelet hem, sewn-on pockets and handmade buttonholes for $80 f.o.b. India. An Austrian quality control staffer checks each piece.
“Part of our contract is that all checking is done in India,” said Shetty. “We can’t do anything once goods have left India.”
Although still modest in size, the spacious main factory is pleasant and professional, a far cry from the often confusing subcontracted operations that used to characterize the Indian leather garment industry. Many of the 400-plus employees have been trained on the job and work in a climate of maximum autonomy. Another 200 work in the tannery; a second tannery is about to open in accordance with ambitious long-term expansion plans.
“We set discrete spot checks, but there’s no pressure applied. We just tell our people, ‘Keep in mind, the reputation of our country is involved in your work,’ and it’s effective,” Shetty said. “It’s not a disadvantage, not being established leather people,” he added. “If you concentrate professionally, you can succeed. India can now meet any standard. There’s a full backup setup that hasn’t been exploited yet. We only need complete collaboration, guidance and a little patience.”
Another industry leader is Madras-based Gaitonde, with an annual group turnover of $40 million. Gaitonde’s name has been synonymous with quality throughout its 25-year history. Originally working primarily with European buyers, Gaitonde now distributes jackets to U.S. department stores, as well.
“Until five years ago, nobody in the U.S. wanted to accept made-in-India leather goods,” said factory manager P. Thambiran. “Now we’re experiencing tremendous growth there.”
Thambiran admits that, except for the half-dozen reputable companies with their own tanning facilities, the leather garment industry’s major problem remains developing a quality raw material supply at stable prices. “In other leather countries, quoted prices are firm for one year. In India, we can’t even confirm prices for one week,” he complained, blaming greedy tannery owners. “Many garment companies will react by giving a low price for the first order and then subsequently raising prices by as much as 30 percent on the next. That leaves buyers with a bad feeling.”
With leather-garment operations requiring low capital investment and quota-free status, problems are compounded by too many small companies creating unwanted competition. Garment operations also figure low on tannery customer lists. Finished leather remains a top export moneymaker and India’s equally aggressive shoe manufacturers also vie for skins.
Overseas competition is another concern. “This year, many German buyers left India for Korea because of rising prices here,” said Thambiran. “Korean cowhides are larger, cutting is simpler and as a result, productivity is higher.”
But Indian operations remain positive. “Korea caters to mass production — 20,000 to 30,000 pieces per style. In India, nobody has that capacity, and our European buyers couldn’t comply either,” said Thambiran. “Although our U.S. business is picking up and we’re thinking of opening a special factory, we will maintain our market diversity.”