Desi products now score over Chinese

City-based industry houses have cut down on their sourcing from China in the last eight months; say that sourcing cost from India is now almost same as that from the neighbouring country


Mumbai: Check out one of the huge suitcases for sale along the footpaths of Crawford Market in Mumbai, and you’ll be urged by the luggage vendor with a “China-make hain, baap!”

But if you’re expecting a bargain, forget it…

From being priced at one-third the cost of Indian-make luggage about two years back, the price difference between Chinese and Indian-make suitcases today would be less than 5 per cent.

So, what really happened to China’s low-wage manufacturing prowess?

“It’s not just suitcases imports, but even textile costs from China have considerably increased in recent times,” said Vijay Kalantri, President of the All India Association of Industries.

According to him, the key reason for the decline in the Red Dragon’s low-cost manufacturing prowess is the increasing labour cost. But what worsens the deal is lack of clarity in taking orders.

“There are a lot of problems with Chinese imports. You order a container of terrywool, but end up receiving tons of terry viscose, and the customs department books you for under-invoicing the consignment,” said Kalantri.

The problem holds true for large businesses too.

In fact, quite a few city-based industry houses have cut down their sourcing from China in the last eight months – and, instead, have started looking at domestic companies.

“China is no more a lucrative option. We have substantially cut our textiles imports from China and are sourcing it locally now as the cost of manufacturing a product in China is on par with India,” said Kishore Biyani, the CEO of Future Group, the largest retailer in the country.

According to industry body Assocham, India’s imports from China in silk, silk yarn and fabric had begun to decrease from 2005-2006 onwards. Silk imports alone had declined by 13 per cent from $233 million in 2005 to $203 million 2006.

Industry veterans cite that China’s dramatic rise as the ‘factory of the world’ was made possible because of its flexible labour markets, exports-encouraging subsidies and business-friendly policies – such as two-year visa permits.

“The China government recently hived off the export subsidies, which makes sourcing a lot dearer,” said Sunil Pathare, CEO of Maxwell Industries, a leading manufacturer of cotton yarn manufacturer for hosiery industry in India.

Until eight months ago, Maxwell sourced raw material such as laces, elastics and frill fabric like nets from China. Presently, the company sources them locally.

And if things continue to deteriorate, the Red Dragon could find its claws completely pried off Indian markets.