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Retail giants flock to India

January 31, 2005 11:00 IST

The trickle is slowly turning into a deluge. While international retail chains such as Wal-Mart, JC Penny and Target are in the midst of big expansion plans in India to take advantage of the scrapping of textile export quotas, several other retail majors have made their debut in the country to source their products.

Some of the big names that have set up their India offices in the past few months are Tesco, Sara Lee, Bombay Company, Sears, Zegna and Li and Fung.

As per the latest information available with the department of industrial policy and promotion, as many as 16 foreign direct investment proposals pertaining to textiles were approved during January-September 2004.

Italian menswear specialist Ermenegildo Zegna is planning tieups with Indian players to sell their finished products and also to source inputs from India.

Zegna, which already has a franchisee showroom in Mumbai, is likely to open another one in Delhi. Marks and Spencer, whose products are being retailed through Diwan Sahib, is also understood to be expanding its presence in the country.

Most of these deals are for the readymades business. A consortium of 12 non-resident Indians and four foreign companies are investing Rs 75 crore (Rs 750 million) in the Bangalore-based Royal Embroideries. Benetton has invested Rs 5.46 crore (Rs 54.6 million) in DCM Benetton India for increasing equity.

In addition, companies like Indian Rayon have entered into technical collaboration agreements.

Indian Rayon has received government approval for a tieup with Glanzstoff Austria for improving its production process of viscose filament yarn.

Similarly, the Faridabad-based SPL Industries has tied-up with Nano-Tex of the US for wrinkle resistant and water and oil repellent technology for cotton garments.

Dresdner Bank has invested Rs 6 crore (Rs 60 million) in the Hoshiarpur-based Apollo Fibres, which manufactures polyester staple fibre.Other proposals included Fresh Tex Asia of Hong Kong, Mescom of Italy and PT Jay Gee Enterprises of Indonesia.

Textiles ministry officials said a number of players, that were earlier sourcing through third parties, were now setting up their own offices in India.

"This will allow them to interact with the sellers directly and reduce costs by eliminating middlemen," an official said.

Wal-Mart already has an office in Bangalore and is now looking at setting up an office in Delhi.

Li and Fung, one of the largest buying houses in Hong Kong, has also opened an office in India.

Monica Gupta in New Delhi
Source: source