‘In­dian busi­nesses must strive for bet­ter, not cheaper’

Shoes & Accessories - - Content -

Agra Footwear and Man­u­fac­tur­ers and Ex­pot­ers Cham­ber (AFMEC) re­mains com­mit­ted to serv­ing the long-lead plan­ning needs of the man­u­fac­tur­ers and ex­porters. With its ac­tion­able rep­re­sen­ta­tion, it is help­ing com­pa­nies tackle busi­ness chal­lenges – from rapidly chang­ing global eco­nomic trends, gov­ern­men­tal poli­cies to new chem­i­cal reg­u­la­tions. One of its prom­i­nent and con­sis­tent ini­tia­tives is Meet at Agra trade event which by now has gained global rep­u­ta­tion. In an in­ter­view with S&A’S Amit Cho­pra, AFMEC’S pres­i­dent Pu­ran Dawar said, “It is very im­por­tant that the leather as well as non-leather shoe­mak­ers con­tinue to im­prove their ef­fi­ciency. In­dia has good leather shoe man­u­fac­tur­ers and bet­ter qual­ity leather. The work­ers may not be very pro­duc­tive but they are bet­ter crafts­men.”

How is AFMEC evolv­ing?

AFMEC is very ex­cited to move the cham­bers and is more closely aligned with the con­stantly chang­ing needs of its mem­bers, both at a man­u­fac­tur­ing and ex­port level. Meet At Agra fair con­tin­ues to break records with sold out space and par­tic­i­pants from more than 25 coun­tries. It re­mains com­mit­ted to serv­ing the lon­glead plan­ning needs of the man­u­fac­tur­ers and ex­porters. With its ac­tion­able rep­re­sen­ta­tion, the cham­ber is help­ing com­pa­nies tackle busi­ness chal­lenges – from rapidly chang­ing global eco­nomic trends, gov­ern­men­tal poli­cies to new chem­i­cal reg­u­la­tions. The as­so­ci­a­tion’s ad­vo­cacy work pro­vides in­sight and sup­port on key leg­isla­tive and reg­u­la­tory is­sues, af­fect­ing mem­bers in global mar­kets, and it main­tains ed­u­ca­tional out­reach to al­lied in­dus­try.

How has the in­dus­try grown post GST?

GST has brought in a ‘one nation one tax’ sys­tem, but its ef­fect in one in­dus­try varies from an­other. PRE-GST, mul­ti­ple in­di­rect taxes re­sulted in in­creased ad­min­is­tra­tive costs for man­u­fac­tur­ers as well as for dis­trib­u­tors, but with GST in place, the com­pli­ance bur­den has eased. How­ever, de­clin­ing ex­ports and high in­fra­struc­ture spend­ing are just some of the con­cerns of this sec­tor. The In­dian leather and footwear in­dus­try pro­vides em­ploy­ment to a large num­ber of skilled and un­skilled work­ers in the coun­try. It con­trib­utes about 10% of the to­tal an­nual ex­port, and this value was ex­pected to in­crease un­der GST. It may take a while, but in the long run we all will ben­e­fit.

How sig­nif­i­cant was AFMEC’S role in rep­re­sent­ing the re­tail­ers and the ex­porters at the GST coun­cil?

AFMEC played a re­ally valu­able role in the re­form process. It was a strong voice in re­form, and even when some of its mem­bers’ in­ter­ests would have hurt in short term, AFMEC ar­gued in fa­vor of GST. In terms of pol­icy in­volve­ment, AFMEC rep­re­sen­ta­tives sit on all ma­jor pol­icy mak­ing bod­ies of In­dia, fo­cus­ing on in­dus­trial de­vel­op­ment and in­no­va­tion. One key role of AFMEC is to pro­mote in­ter­na­tional in­dus­trial co-op­er­a­tion. It iden­ti­fies and ad­dresses spe­cial­ized needs of the SMES sec­tor.

What are some of the chal­lenges, short-term and long-term, that you an­tic­i­pate to wit­ness?

With the cost of man­u­fac­tur­ing touch­ing a new high, man­u­fac­tur­ing in­dus­tries, cou­pled with global play­ers im­ple­ment­ing higher im­port tar­iffs on var­i­ous sec­tors, many com­pa­nies are look­ing at In­dia as a place for out­sourc­ing. So, those who are dar­ing to go and get the busi­ness are get­ting busi­ness. There is no way we can achieve the economies of China where they have huge pro­duc­tion fa­cil­i­ties and sig­nif­i­cantly lower la­bor costs and high lev­els of pro­duc­tiv­ity.

But this seg­ment is mainly non­leather. It is very im­por­tant that the leather as well as non-leather shoe­mak­ers con­tinue to im­prove their ef­fi­ciency. In­dia has good leather shoe man­u­fac­tur­ers and bet­ter qual­ity leather. The work­ers may not be very pro­duc­tive but they are bet­ter crafts­men.

What would be AFMEC’S look­out for 18-19?

AFMEC is the com­bined voice of man­u­fac­tur­ers and ex­porters in Agra. Be­ing a non-profit mak­ing or­ga­ni­za­tion, it works with all stake­hold­ers for cre­at­ing the right en­vi­ron­ment for the growth of mod­ern man­u­fac­tur­ing and ex­port in­dus­try in In­dia. We en­cour­age, de­velop, fa­cil­i­tate and sup­port man­u­fac­tur­ers to mod­ern­ize and adopt best prac­tices that will en­chant cus­tomers.

Should we hope to see a big­ger Meet At Agra’18?

Most peo­ple at Meet At Agra’17 felt that the show was slightly qui­eter com­pared with the pre­vi­ous edi­tions, re­flect­ing a sub­dued mar­ket in Asia and across many parts of the world. The rea­sons var­ied and are com­plex with sink­ing de­mand, high re­tail in­ven­to­ries fol­low­ing mild win­ters and the on­go­ing sub­sti­tu­tion of leather with non-leather ma­te­ri­als, and all these are hav­ing an

The Amer­i­can poli­cies slow­down in re­gions such as China, Ja­pan and EU will im­pede the re­vival of in­ter­nat ional trade any time soon. That means there will be lower de­mand for im­ported goods and ser­vices in most parts of the world.

im­pact on the mar­ket. How­ever, we hope that will be dif­fer­ent this year; we ex­pect more in­ter­est and vis­i­tors.

What chal­lenges are the In­dian com­pa­nies fac­ing while go­ing global?

Ex­pand­ing a busi­ness is al­ways a chal­lenge. It re­quires prod­uct de­vel­op­ments, po­si­tion­ing, aware­ness build­ing, dis­tri­bu­tion, sell­ing and so on. In­dian com­pa­nies face few spe­cial chal­lenges when ex­pand­ing. Neg­a­tive press cov­er­ing In­dia’s cor­rup­tion and in­ad­e­quate in­fra­struc­ture has done far greater dam­age to In­dian com­pa­nies than those com­pa­nies have done de­fend­ing their busi­ness. It’s very im­por­tant for In­dian com­pa­nies to Lever­age Core Com­pe­ten­cies. In­dian com­pa­nies have con­sis­tently failed to un­der­stand the im­por­tance of do­ing this; aim­ing in­stead on de­liv­er­ing many dif­fer­ent kinds of prod­ucts, in or­der to di­ver­sify its of­fer­ing. To suc­ceed, com­pa­nies should lever­age their core com­pe­ten­cies by cut­ting back in ar­eas they don’t ex­e­cute well, and fo­cus in­stead on where they can de­liver the most value, most ef­fi­ciently.to suc­ceed, In­dian busi­nesses en­ter­ing new mar­kets must strive for some­thing bet­ter, not cheaper. What par­al­lels and “lessons learned” can be drawn from Euro­pean exhibitions? Even in to­day’s dig­i­tal world, where so much busi­ness hap­pens on­line, trade shows still play a vi­tal role for most B2B com­pa­nies. Over the years we’ve worked with nu­mer­ous clients on trade show strate­gies, booth de­sign and pro­mo­tions. We are al­ways try­ing to get in­no­va­tive raw ma­te­ri­als as well tech­no­log­i­cal pro­gres­sive ex­hibitors. How well is Make in In­dia ini­tia­tive do­ing for shoes and ma­te­ri­als man­u­fac­tur­ers? I don’t en­tirely buy the idea that man­u­fac­tur­ing alone can be the so­lu­tion for In­dia’s growth. It is only part of the larger so­lu­tion that In­dia needs. The Make in In­dia ini­tia­tive has show­cased In­dia as a po­ten­tial man­u­fac­tur­ing hub in the eyes of the world. What’s vi­tal is to en­sure that pol­icy paral­y­sis, bu­reau­cratic bot­tle­necks and im­ped­i­ments to ex­e­cu­tion do not hand­i­cap the very pur­pose of the ini­tia­tive.

Is the global mar­ket slow or is there in­tense com­pe­ti­tion for In­dian ex­ports?

Brexit is the new­est worry as the EU ac­counts for nearly a third of the global trade even though its share in global GDP is 25 per cent.

The Amer­i­can poli­cies, slow­down in re­gions such as China, Ja­pan and EU will im­pede the re­vival of in­ter­na­tional trade any time soon. That means there will be lower de­mand for im­ported goods and ser­vices in most parts of the world. Slow­ing China will im­pact In­dia’s ex­ports di­rectly — by lim­it­ing ex­ports to China and giv­ing tough com­pe­ti­tion to In­dia’s ex­ports in third coun­try mar­kets as In­dia com­petes with China in sev­eral prod­ucts start­ing from ap­parel and footwear to steel and chem­i­cals.

In­dia’s dream of re­plac­ing China as the ex­porter of low cost man­u­fac­tured goods as en­vis­aged un­der PM Modi’s Make in In­dia ini­tia­tive is go­ing to be se­ri­ously chal­lenged by ever-grow­ing com­pe­ti­tion from Least De­vel­oped Coun­tries (LDCS) which are likely to have la­bor cost ad­van­tage over In­dia. In­dia will con­tinue to be un­der pres­sure to keep hik­ing min­i­mum wages de­spite hav­ing lower la­bor pro­duc­tiv­ity com­pared to coun­tries such as Bangladesh and Viet­nam in key man­u­fac­tur­ing in­dus­tries.

Brexit is the new­est worry as the EU ac­counts for nearly a third of the global trade even though its share in global GDP is 25 per cent.

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