The Hindu Business Line : US co to outsource leather shoes from Chennai

GLOBAL Brand Marketing, a US-based footwear and apparel company, on Tuesday announced that it would source leather shoes from India beginning June this year.

GBM's Chairman & Chief Executive, Mr Killick Datta, felt the development was important for the Indian industry, as this is the first time an upper-end global footwear company had entered into a large outsourcing deal in India. He felt GBM's decision would spark interest in Indian outsourcing among other top-end footwear companies.

GBM plans to source footwear for two of its brands, Diesel and Nautica, from two Chennai firms; one of them is Farida Shoes. Mr Datta estimated the turnover in the first year to be in the range of $4-5 million.

"Chennai has been chosen for its better infrastructure and availability of highly skilled labour in footwear," Mr Datta said. GBM aims to headquarter its Indian operations in Chennai and also look for a local partner to distribute its brands in India.

GBM's announcement follows a visit to India by officials of a few American footwear companies, such as Johnston & Murphy, last November to explore outsourcing opportunities. Officials from the American retail company, Wal-Mart, had also done the same at that time.

Though the leather industry suffered a 6.30 per cent decline in exports ($1.81 billion) in 2002-03, the footwear segment grew by 3.61 per cent to register a turnover of $410 million. Officials in the Commerce Ministry feel the leather footwear segment's competitiveness makes for a bright future despite the large strides taken recently by the Chinese industry.

Traditionally, Indian leather footwear companies have exported primarily to Western Europe. Over the last year, Ministry officials said an increasing number of American companies had expressed interest in outsourcing from India. The US is the world's largest market for leather products.

In 2003, GBM registered sales of $300 million. Among the brands marketed by the company are Diesel, Dry-Shod and Pony.