The withering baniyaan tree

Thehubs of Kolkata and adjacent areas once dominated the hosiery industry inIndia. A number of issues in the last 30 years have made this hub yield topspot to Tirupur. Ritusmita Biswas delves into the reasons.

If you happen to pass through anyold Kolkata neighbourhood in the evenings, where still the wailing of thetelevision sets are loud enough to be heard in the streets, the most familiarpromotional voices that you can hear are probably those of actors or modelsadvising you to wear some heavenly and comfortable piece of personal clothing-either Lux Cozy, or Nawab Brand, or Dollar Underwear!

Yes, those are the extremelypopular and nostalgic hosiery advertisements in the regional televisions thatmany of us have grown up watching. The role of advertising as an instrument formarketing has been long acknowledged. But, the question that keeps recurring isthat though these campaigns do influence us in deciding on our choice ofmarketing, do they really make us think about the actual industry behind them?Probably, no. Hence, here's a brief discussion to shed some light on EasternIndia's hosiery industry, which still remains largely unknown to generalconsumers.

Says Vinod Kumar Gupta, managing director, Dollar Industries Ltd, "The eastern zone contributes almost 30 per cent to the industry. Apart from us, Rupa and Lux Cozy are the market leaders." Agrees Promod Modi, whose brand Begonia has been in the market for years: "Eastern India is a competitive market. It is a base for knit and hosiery goods, and caters to the Indian market as well as the Middle East."

An official spokesperson from Rupa says: "Our company was incorporated in 1985 as Rupa & Co Ltd. The company, in fact, was established about four decades ago as Binod Hosiery, which was later rechristened Rupa & Co Ltd. At present, Rupa is one of the largest manufacturers of innerwear in India producing nearly 8,00,000 units per day.

Early history of hosiery

The hosiery industry has a glorious history in East India, with West Bengal being a pioneer for 116 years. Kolkata is considered as the birthplace of the hosiery industry in the country, with the first hosiery factory established at the port area of Kidderpore more than 100 years ago. Overall, Kolkata, South 24 Parganas and Howrah districts constitute the hub of the hosiery industry in the region, and have been able to maintain this importance in both manufacturing and trade.

The industry reached its peak during World War II, when demand topped a high with increased migration to Kolkata, then Calcutta. The factors that led to the growth spike of this industry were mainly the easy marketability of the products and the much-improved transportation system.

The tariff protection that was accorded to the hosiery industry in the aftermath of the Swadeshi movement boosted the growth and development of the industry. Though history shows that hosiery products were imported from Hong Kong and Japan in large quantities in the pre-Independence era, which somewhat continued till as late as 1955 under the benefits of the open licence policy, things changed with the development of indigenous machineries, primarily as a result of the import restrictions that were imposed by the newly-formed government of India.

After World War II, the hosiery industry in the region expanded exponentially, but in an unplanned way. This in turn gave birth to unhealthy competition, in a way stunting the true potential of the industry. But owing to division in modules and work force, West Bengal still remained the leader in hosiery production, producing about 80 per cent of the country's hosiery needs in the 1960s.

But gradually, a strong challenge for this industry came from new hubs like Tirupur, Delhi, Mumbai, and Ludhiana. Also, the labour unrest of the 1970s and 1980s were a major hindrance to proper functioning of production units in West Bengal. As a result, at present, the 50-year-old West Bengal Garment Manufacturers & Dealers Association (WBGMDA), now affiliated to the Federation of Indian Chambers of Commerce and Industry (FICCI), has only about 500 companies as members, though the estimated membership should have been more. In order to make the industry mainstream, the association is working towards bringing hosiery products under taxation rules and excise duty, though care needs to be taken to ensure proper enforcement.

Current scenario

In recent years, the hosiery industry has changed its outlook to cater to the changing needs of consumers, who have moved towards brands. Though West Bengal houses some of the top hosiery business houses like Lux and Rupa, it has lost its leadership position to newer pockets of hosiery manufacturing. There are now more modernised processes and state-of-the-art machineries, and the birthplace of hosiery is suffering due to a lack of adaptation to changing times.

To successfully compete with its nearest rival, Tirupur, where production is over ₹15,000 crore (both domestic and export), West Bengal needs to take strong steps to revive the glorious days. "Eastern India is one of the most promising regions with huge prospects for growth. It boasts of a diverse population and has good media outreach, in addition to providing easy access to Nepal, Myanmar, Bhutan, etc. The presence of a metro city, Kolkata, also makes it one of the coveted destinations for business opportunities," says the Rupa spokesperson.

"The most important advantage of the region is manpower. Low cost potential workers are easily available here in comparison to other regions. Second is the favourable and potential market that keeps on motivating manufacturers to come up with innovative products," says Gupta of Dollar Industry. Modi however says, "The market is ruled by garments from the unorganised sector. This makes products cheaper, but at the same time quality becomes a casualty."

Agrees Gupta, "The only drawback we find in the region is that the market is highly fragmented and has many local players. Plus, there are certain challenges like 100 days of work for labourers, strikes, lack of skilled labour, and good automation, etc," The Rupa spokesperson points out: "In spite of endorsing a strategic geographic location, East India is infested with certain vices that have greatly hampered economic growth. Stagnation and disinterest of investors have adversely affected business prospects. Also, there have been issues with acquiring land for the development of industries in the eastern region, which hinders the flow of investment."

The Rupa spokesperson continues, "The total eastern Indian market is pegged at ₹4,400 crore due to growing urbanisation, rising disposable incomes, and the booming retail sector. The innerwear industry in India looks promising with the presence of a number of national and international players, who are all big in their own right."

What next

Kolkata and its surroundings have around 17,900 hosiery units, which include major brands such as Amul, Lux, Rupa, along with numerous small- and medium-sized brands. This hosiery sector employs a workforce of more than 1 lakh, and produces around 180 million kg of hosiery goods. But West Bengal has been losing out to Tirupur as a result of cheap labour and lower production costs, because of which companies have shifted their base. The important thing to take into consideration here is that Kolkata, in spite of being situated near a port and an airport, exports lesser quantity of goods than Tirupur, which is around 500 km from a port and more than 60 km far from the nearest airport. Also, another striking factor about the current state of the hosiery industry in West Bengal as compared with Tirupur is that while Kolkata produces a paltry amount of ₹2,000 crore worth of hosiery, the yearly average production of Tirupur amounts to ₹10,000 crore.

All that needs to be done to revive the hosiery industry is streamlined infrastructure. To boost the industry, the WBGMDA has started setting up a hosiery park in Jagadishpur, Howrah, and a special purpose vehicle was created by the government through the West Bengal Small Industries Development Corporation Limited (WBSIDC). According to the West Bengal Hosiery Association, the work for setting up the park is under way, and they are looking forward to complete it soon.

In the meantime, the association has taken up several other steps to boost exports, which include organising exhibitions where buyers can meet sellers, creating more units with higher capacity to cater to the demand, and increasing exports to at least ₹5000 crore in 2015-2016. However, all these are still in a very nascent stage and might take a bit of time to attain tangible results.

Says Modi, "The West Bengal government announced a textiles incentive scheme for the micro, small and medium enterprises (MSME) sector in 2013, and entrepreneurs are taking note of same." Gupta adds: "To promote this industry, the West Bengal Hosiery Association assisted by the ministry of textiles is developing another hosiery park at Dankuni."

"Lack of direct investment is one of the major challenges in East India, followed by infrastructural issues. The terrain and geographic location of the Northeast also poses logistics issues for manufacturers in this area. The state governments of West Bengal, Odisha and those of the Northeast are highly supportive in offering land on long-term lease along with incentives. Under the National Skill Development Policy, they are running various programmes to attract start-ups and entrepreneurs to the region. However, due to less investment in comparison to other regions, the East is yet to be explored to its full potential," the Rupa spokesperson sums up.

With additional inputs from Suvanki Ghosh.