Less than a month ago, the worldwide chief of the world’s biggest luxury brand Louis Vuitton, Yves Carcelle, blasted India’s policy of imposing a 30% local sourcing requirement for luxury groups such as his as ‘nonsense’.
Unsaid but implicit in his blunt statement, made as part of an interview to ET, was the suggestion that in the world of luxury, history, geography and quality were hugely important, the first two attributes having a significant bearing on the third. Decoded further, it meant that India simply could not provide all what it takes for Louis Vuitton products to retain their luxury edge.
But Carcelle’s one-time deputy and fellow frenchman, Regis Fournier, is determined to turn that long accepted wisdom, well, ‘nonsense’. The former India chief of Louis Vuitton is setting up a manufacturing facility in this country that will supply the world’s top luxury labels. “They will all come here,” says Fournier, defiantly.
His firm La Compagnie (meaning ‘The Company’ in French) plans to invest Rs 350 crore in a facility in Puducherry, a former French colony, to make shoe uppers for unnamed luxury footwear brands starting December. It will subsequently produce 100% India-made high-end bags, clutches and clothes for the global market.
Fournier is not alone. Across India, in cities such as Delhi, Kanpur, Lucknow and Jaipur, a clutch of businessmen are retooling their businesses, hoping to supply to global luxury goods makers keen on setting up shop in India.
Already, suppliers to brands such as Armani, Polo Ralph Lauren, Hermes, Fendi and Bottega Veneta, among others, although in a small way, feel that that last month’s policy changes will open up a window of opportunity for them.
The government last month allowed foreign retailers to set up majority-owned (with more than 51% shareholding) single-brand stores in India, but on the condition they would have to source 30% of their products from Indian vendors.
But foreign luxury brands, keen as they are to set up shop in India, are not as enthused by the sourcing conditions. One reason for this, say experts, could be a perception that countries such as India are not quite ready to supply or make a truly world-class luxury product.
But Indian entrepreneurs say that luxury brands will soon realize the inevitability of having to source locally. With sales slowing worldwide, it is not far away when luxury firms will have to tap markets such as India aggressively. “Local sourcing will be the natural way for them to become competitive,” says Dilip Kapur, founder of HiDesign, one of India’s biggest premium leather accessories retailers.
According to Kapur, India has the wherewithal to make luxury items. “There is handicraft skill in India which is exceptional,” he says, adding that Tamil Nadu has some of the best tanneries, and leather products from the state are being supplied to most of the big brands outside India. “The 30% mandatory sourcing clause will help the industry grow.”