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‘CMAI needs to take a leap into the next level’: Rahul Mehta

Rahul Mehta has been unanimously re-elected the President of Clothing Manufacturers Association of India popularly known as CMAI for the year 2018 - 2020. Under his leadership, CMAI has been growing leaps and bounds. He speaks to DFU Publications about the issues plaguing the Indian apparel manufacturing industry today and his vision ahead for CMAI.

 

Rahul MehtaBeing unanimously re-elected as the President of CMAI, how do you plan to go forward?

Personally, I would like to expand CMAI’s scope and activities. At the moment, the National Garment Fair plays a dominant role in the service we provide. In the last couple of years, arbitration and conciliation processes and dispute resolution has also become a crucial part of CMAI’s activities along with skills development training, for which, we have a tie up with the government. We have trained over 45,000 workers under the ISD (Integrated Skill Development) scheme.

CMAI needs to take a leap into the next level. If you analyze the structure of our domestic industry, we have focused on domestic segment for the last several years. There are a few major constraints/limitations in the industry viz: poor productivity in manufacturing processes; hesitance to increase scale of operations; lack of brand creation, they need not be international or national, even regional is fine. There is inadequate knowledge and appreciation of the strength or value of creating a brand versus having a label; exposure to social compliance which is going to play an important role in coming years like adherence to labour laws, sustainability and manufacturing green products etc, These are areas where CMAI should try to push members into getting greater efficiency, awareness and exposure.

“Some superficial study was done in the 1990’s and we are merely adding 10 per cent on a year on year basis and arriving at to the figure about the latest size of market. It is time CMAI undertakes a major research to determine the size of the market. We are already in talks with research agencies and might be announcing soon.”

At the macro level, the biggest constraint of our industry is determining the actual size of the industry. Estimates about the size of Indian market range from Rs 150,000 to Rs 200,000 crores to Rs 500,000 to Rs 600,0000 crores. We have no clarity about the share of organized and unorganized segments. Some superficial study was done in the 1990’s and we are merely adding 10 per cent on a year on year basis and arriving at to the figure about the latest size of market. It is time CMAI undertakes a research to determine the size of the market. We are already in talks with research agencies and might be announcing soon.

Essentially, these are the five directions that I will like to take CMAI in the coming two years. Of course, other initiatives will continue. Nobody can deny the importance and role played by the NGF’s in the domestic industry’s calendar. The January fair is shaping up well and I expect January 2019 fair to have 350 to 400 participants, a far cry from the 150 to 170 participants we had a couple of years ago. We are looking at various other formats/platforms for manufacturers and retailers. We have it on the agenda and will be announcing shortly. We are also hoping to tie up with regional associations and strengthening the bond between regional associations and the national organization.

In the last few years, we have been able to achieve a high level of credibility with the government and are hoping to continue this relationship. Exciting times are ahead. I am hoping in the coming years the strong foundation our predecessors laid down, which I tried to consolidate, will be consolidated further. We will continue growing both in stature and numbers.

Earlier, CMAI used to be the biggest body representing the entire industry, providing a platform to all brands. I believe all these activities have now been restricted to small and mid segment players where as the industry is growing out of this space. What is the way ahead?

I disagree, in fact, in the last few years the association has come much closer to larger players. I would say, for several years, CMAI only represented the interest of smaller and regional players, where as larger players were more or less out of the ambit. I think it was from the time of excise duty representation that we had earlier, it was strengthened by GST and today with the Captain’s Forum and the Captain’s Table, two groups have been formed within the association. Almost three large manufacturers and retailers are actively involved in CMAI’s activities. It may be recalled that a meeting called by CMAI when GST was being introduced was attended by industry bigwigs like: Sanjay Lalbhai, Noel Tata, Ashish Dixit of Aditya Birla,  J Suresh of Arvind, B S Nagesh and Govind Shrikhande of Shoppers Stop (then), Vasant Kumar of Max, Sanjay Behl and Gaurav Mahajan from Raymonds, Sanjeev Mohanty from Levi’s and of course Kishore Biyani and Rakesh Biyani from Future Group. Gautam Singhania could not make it due to a flight delay. So, when top players from the industry attend a meeting called by CMAI, I don’t think the association can aim for anything higher. Today, all these people are actively involved and supporting the Association. CMAI is now closely aligned with and involved with larger players, both at the retail and brand level.

You mentioned CMAI is looking at partnering or associating with other associations. What inclusive role does CMAI plan for them as well as providing platform to international brands coming to India at the National Garment Fairs?

“There is a lot of scope for expansion of National Garment Fair. Ideally, I would like it to be a one stop solution for the entire clothing industry. Space being a constraint, we are hoping to keep adding to that. As for international brands/ retailers, the only factor we have to keep in mind is these fairs are essentially providing a platform to Indian brands and manufacturers.”

At NGF, our biggest constraint is space. Today, we are unable to fully satisfy even existing members and supporters. Last year, even after adding about 10,000 sq. mt. space, we had about a 150 people on the wait list who could not be accommodated. Fortunately, NESC complex is adding one more building to the existing exhibition area, if that happens we will have another 20,000 sq.mt we can think of newer participants then, not just international brands but also service providers, fashion accessories manufacturers, home furnishing, footwear etc.

Frankly, across the world, at trade fairs it is not the biggies who participate, because they have their own marketing arrangements, shows etc. It is always the small and medium players, be it CHIC fair in China or The Canton Fair or Magic Show or any show in London and Paris and Spain, you will always find the importance of small and medium sized brands.

This is a platform we are providing to these players and I would not want any activity or alteration of the basic format of NGF which will hurt the interest of these players. However, we are open to looking at other events, standalone events; even separate fairs which could be a more inclusive event for external players. It could be: service provider, fabric suppliers, international brands etc. These are various options and formats we are continuously looking at.

What is the possibility of Indian brands spreading their wings globally?

In neighbouring countries and countries where there is a large Indian diaspora, there is a huge potential for Indian brands. Recently, I was invited by the government to represent India at a meeting with the Sri Lankan delegation, who were keen on duty free garment imports into India, without any cap or restriction. As you know, today they have a cap of eight million pieces. While taking a strong stand against opening up in this manner, I emphasized on reciprocal duty concession for Indian garments and brands entering Sri Lanka.

CMAI President Rahul Mehta

We are having talks with Bangladesh on similar lines. We are strongly taking up with neighbouring countries, especially those with whom we have some kind of FTA of their goods coming into India that our brands should also be given similar concessions in their markets. Their markets are small compared to India but still have a potential. It’s like opening up to one more state within India, say UP or Maharashtra.

CMAI is actively supporting the movement and propagating our expansion. On whether Indian brands will be able to export to Europe or the US or UK under our brand name, honestly, it’s a tough challenge because brand marketing is an expensive proposition. I don’t see our brands to be inferior in any manner but there could be limitations in terms of resources to market our own brand.

Bangladesh has duty free entry into India and India is making a presentation as a rule of region. What initiative has CMAI taken on this?

We are the ones who took the initiative. CMAI has been closely interacting with the ministry of commerce and textile to say that we are not against the entry of Bangladesh or Sri Lankan goods into our market, we should have a stipulation of a fabric forward policy, so that they can use either fabric manufacturers within those countries or Indian fabric and secondly our garment should have access to their markets. CMAI has been in the forefront of pushing this agenda.

What is your vision for the retail industry?

I am not able to reconcile to the fact that many of our members are struggling to survive. On the other hand is the demographic fact that: the population is increasing; urbanization is increasing; and demand for western clothing is also increasing. Hence, I don’t understand why the domestic industry cannot grow more than 10 to 12 per cent. Hopefully, our study will throw some light and we hope to continue it at intervals to measure market movements. I find a very encouraging future for the industry. Yes, shifts could take place in various segments, be it organized-unorganized, small, medium, own label, national label. But the overall market should be growing at a healthy pace.

What is CMAI doing on technology front?

“While we have taken care of skills development at the basic level to an extent, I would like CMAI to play a role in improving productivity. Better productivity can happen with more technology. Now, technology does not necessarily mean only machinery, it can also be better systems and processes. Hopefully, CMAI will play a role in improving them because that is going to be essential; the market in spite of its growth is becoming more competitive.”

While we have taken care of skills development at the basic level, I would like CMAI to play a role in improving productivity. Better productivity can happen with more technology. Technology does not necessarily mean only machineries it can also be better systems and processes. Hopefully, CMAI will play a role in improving them because that is going to be essential; the market in spite of its growth is becoming more competitive.

More imported goods will be coming in, possibly at lower prices and margins will get squeezed. You cannot survive by simply increasing prices, you have to reduce costs. You cannot reduce cost by making inferior products. That will be the fastest way to disaster. You will have to improve productivity at your unit whether it is a 25 machine unit or a 250 machine unit. I am hoping CMAI will be able to play a significant role in this regard.

Is CMAI pushing the case for opening fabric imports for the kind of fabrics and yarns not available in India?

Yes, we have spoken to the government. We are aligning ourselves with the demands or representations and requests from exporters led by AEPC, that India is too limited in its basket of products. While we are expanding our market, our product basket remains stagnant. I have said this for the last 10-12 years, that India’s forte is cotton-based products in the middle priced casual wear category. I am willing to stick my neck and say India has almost 30 to 35 per cent market share in the world and you cannot keep growing at that level. They are not going to buy 50 per cent. So the only way Indian exports can grow is to expand the product basket. Both the government and exporters need to realize this. There is a limit to which you can keep supplying rayon blouses and cotton casual shirts. You will have to move on to other products and for that, either you need to introduce those fabric manufacturing capacities into India or allow duty free imports.

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