Indian Retailers Move to Bangladesh to source Apparels.

Retailers always look for efficient sourcing of goods. Indian retailers, reeling under rising costs of goods and fuel in India, are looking  eastwards to drive in cost efficiencies. Bangladesh has emerged to be the new destination for sourcing apparels.

The move comes after the Prime Minister announced duty free imports of 46 textile items to India, in his visit to the country in September. This will now allow retails to bring down costs of apparels by 15-20 per cent owing to the cheap cost of labour and duty free imports.

As stocks refuse to fly off the shelf due to high prices, retailers are looking at newer locations to source apparels. It's been a tough year for retailers who have been grappling with sluggish volumes, high cotton prices and contracting margins.

Reliance Retail is reportedly looking to set up an office in Bangladesh to source about 20 per cent of their apparels from the country. Last week, Shoppers Stop too sent a sourcing team to finalize vendors in the country.

Govind Shrikhande, MD, Shoppers Stop said that a team was sent to Bangladesh to look at vendors and factories. “By March, the batch imported from Bangladesh will hit our shelves for sure,” Shrikhande told NDTV Profit.

International retailers like Walmart, J C Penny, Marks& Spencers and Zara already get their apparels stitched in Bangladesh. Now  Indian retailers are also following suit and expect the dividends by February.

"We expect the prices of apparels to come down when the new season kicks in by February 2012,” Pankaj Tibrewal, COO, Pantaloons, told NDTV Profit. “Soon after our sale period we should have fresh stock reflecting price correction," he added.

However, while retailers are going full throttle to ensure cost efficiencies including sourcing from Bangladesh, experts spell caution.

They say that the domestic apparel industry, which provides large employment to the country is slowly losing its competitive advantage, which will be a key concern if this trend catches on.

Source : profit.ndtv.com