At a time when foreign brands are wary about the sourcing clause for investing in India’s retail sector, British men’s luxury clothing and accessories label, Hackett London today said it sees the country as a potential global sourcing hub.
The company has, however, decided to partner with Aditya Birla group firm Madura Fashion & Lifestyle (MFL) in a 50:50 joint venture for expanding its footprints in India. It plans to have 15 exclusive stores in five years.
“We see the potential for sourcing of our products from India. The day we source from India, it will be not be for Hackett in India alone, it will be for our international operations. If we can find the right quality, India can be our global sourcing hub,” Hackett London Managing Director Vicente Castellano told PTI.
He, however, said for the time being the company would continue to import products from Europe for the Indian operations. “Our fabrics are mostly sourced from British and Italian mills and it is easier for us to make the products there,” he said, adding it was difficult to say when it would begin sourcing from India.
When asked if the sourcing clause was a cause for concern, Castellano declined a direct comment but said such norms were not unique to India and many other countries also “take steps to protect their domestic industry”.
The government, while allowing 100 percent FDI in single brand and 51 percent in multi-brand retail, has made it mandatory for foreign retailers to source 30 percent of their products from India. For multi-brand retailers the sourcing has to be from micro, small and medium enterprise.
Swedish furniture retailer IKEA had led the chorus of foreign retailers in expressing concerns over the sourcing clause and the tenure for its calculation. Commenting on the brand’s expansion plans, Castellano said: “Delhi is our first standalone store although our products have been sold at Madura’s ‘Collective’ stores for the last three years. Two more stores are coming up soon in Bangalore and Chandigarh.”
According to Madura Garments Lifestyle Retail COO (International Brands and Retail) Shitalkumar Mehta, the JV plans to have 15 stores in the next five years. “Each store will entail an investment of about Rs 3 crore,” Mehta said.
When asked the Hackett London’s growth expectation in India, Castellino said: “In the three years that we have sold through Collective, we had 25 per cent year-on-year growth and we are confident of accelerating it further.”
He also said despite the policy relaxation, Hackett London would prefer to partner Madura, as having a local partner has helped in understanding the Indian market better.