India: Fashion Market Prosperity International Brands Actively Purchase Garment
The Indian fashion market has experienced rapid growth, prompting global brands to rethink their strategies and start sourcing garments from local manufacturers to better meet domestic demand. This shift is not only driven by cost considerations but also by the need to remain competitive in a market where import duties can significantly eat into profit margins.
Brands like Donna Karan New York (DKNY), Gant, Arrow, and Marks & Spencer have adopted this approach, aiming to bypass high import taxes and offer more affordable products. In some cases, they’ve even set up additional procurement bases to support their global operations. According to Ashesh Amin, president of clothing and retail at SKNL Group, importing garments priced between $7 and $11 in India would be unrealistic due to the steep tax rates—some items face a 50% tax burden.
In May, SKNL signed a licensing deal for DKNY men’s apparel, allowing it to distribute the full range globally outside Japan. Currently, all purchases for Indian stores are made locally, with retail prices capped at 15% above those in neighboring markets like Singapore and Dubai.
This shift is largely fueled by the growing presence of international retailers in India. A few years ago, most global brands were scarce, making local production unnecessary. However, as sales in India have increased, so has the demand for localized sourcing.
According to India’s Central Statistics Office, the textile and apparel retail market grew by 8.5% during the fiscal year 2009–2010. While the number may seem modest, it marked a turning point for many brands, who began exporting from India to other markets.
A prime example is the joint venture between Marks & Spencer and Reliance Retail. With 17 stores across India, the brand offers products ranging from $2 to $75. The company is expected to increase its local procurement from 40% to 70% in the near future. During the same fiscal year, it sourced up to $175 million worth of goods from 42 Indian suppliers, including items exported abroad.
Another key driver behind this trend is the rise of franchise agreements with Indian partners. Many foreign brands have entered into joint ventures with local manufacturers in the past two years, with contracts requiring them to import fully from abroad for the first two years.
Arvind Brands, which handles marketing for international labels like Gant, Izod, and Arrow in India, reported annual sales of $120 million during the 2009–2010 period. The company is currently negotiating new deals to bring more international brands into the Indian market.
As Arvind Brands notes, as long as import taxes remain, most purchases will continue to be made locally. However, if these taxes are removed, manufacturers may look to source from the most cost-effective locations globally.
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