CHENNAI : Two major shifts are happening in footwear sector. One, consumers globally are preferring non-leather footwear like slippers, sneakers, boots, sports shoes, running shoes and so on, and global brands are shifting or diversifying their supply chain out of China and Vietnam.
India’s efforts to capture companies shifting bases out of China in electronics sector are gaining much attention, but footwear sector churn is not widely known.
Tamil Nadu is capitalising this trend with policy initiatives and creating a material ecosystem. It’s unlike electronics where it faces severe competition from other states. Suppliers of brands like Nike, Crocs, Adidas, Puma and others are shifting their manufacturing facility to the state. Major Taiwanese contract manufacturers of global footwear companies have announced investments of more than `6,600 crore in recently concluded investor’s meet.
Feng Tay, High Glory Footwear India, TKG Taekwong, Hong Fu and Singapore-based Zhong Bu are some of the companies that expressed interest in Tamil Nadu. Most of these manufacturing are joint ventures with Indian companies with technology licensing, and equity tie-ups. The state traditionally has a strong leather footwear sector with clusters in Ambur, Vaniyambadi, Ranipet, Vellore, Erode and Dindigul regions. It has 38% share in total footwear and leather output in the country, according to the state government data.
Florence Shoe Company has been involved in leather footwear for long and is now venturing into non-leather business. Aqeel Panaruna, Chairman of the company and Chairman of Indian Shoe Federation (ISF) said they’re tapping the growth in the sector with a huge market and volume. He said apart from the China+1 strategy, relatively higher cost of production in China and Vietnam is also a factor in the shift.
He said the availability of large land banks with government entity SIPCOT helps industries to set up large factories instead of time consuming land acquisition is a differentiating factor. He added that Tamil Nadu’s Footwear and Leather Production Policy released in 2022 is the reason behind major suppliers choosing the state. A report by Invest India states India has lower water, power cost and corporate tax than other two.
Supply chain, material ecosystem
Meanwhile, various Industry captains TNIE spoke to urged the importance of bringing the supply-chain and material ecosystem to the state, which is currently heavily dependent on China. “Unless you bring the material ecosystem, we can’t fully benefit from this shift,” Aqeel Panaruna said.
The industry needs many of components shoe sole, synthetic materials, fabrics, metal ornaments, buckles, lays etc. Import of these items push up cost of production. Industry argues for a production linked scheme (PLI) for footwear to speed up localisation. Indian players are partnering with Taiwanese players for technical know-how, saying there’s no point in reinventing the wheel. But they have to do more to succeed in the long-term.
Tata International, part of the Tata group, manufactures and exports footwear for global brands like Clarks, H&M, Marks & Spencer and Zara. It has three manufacturing facilities in the state. Speaking to TNIE, PS Suresh, business head of Tata International Footwear division, said the global trend is shifting towards leisure wear from formals or combination of both. The changing expectations of GenZ of new designs, new experiences are shaping the industry’s trajectory, he said. He stressed on the need for a domestic material ecosystem and establishing research and development, design centers to move up the value chain, adding it may happen in next 5- 10 years in India.
“Athleisure, which includes sports and casual wear like sneakers, is growing significantly. Indian companies should understand the technical aspects of the manufacturing process and the design and fashion trends and assess the consumer choices to create products,” Suresh said.
TN govt push
The state government is setting up a non-leather footwear park at Ranipet district on Chennai-Bengaluru highway, which includes bringing manufacturers and component suppliers to a single location with common facilities.
Rafiq Ahmed, MD, Kothari Industrial Corporation, said the company would establish a mega plug and play manufacturing complex for footwear components by the end of 2025. “This would enable Indian companies to avoid logistical delays from China and consequent order delays. There is a general perception that Indian companies don’t deliver on time but that’s not because we’re lethargic. This would help us deliver on committed deadline to the global brands,”
The company has opened a shoe manufacturing facility for US brand Crocs in a joint venture and plans to open 30 plug and play component facilities around that. Total investments of the company is `2,500 crores and Rafiq Ahmed said it could go up significantly.
BEST foot forward
Indian footwear market is expected to jump from $26 billion in 2022 to $90 billion by 2030
Growth will be driven by increase in non-leather footwear demand
Share of non-leather footwear in India to increase from 25% to 75% by 20230
Non-leather footwear to become $67.5 billion market by 2030
Source: Global Trade Research Initiative