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India’s Growing Trainer Market Attracts Global Manufacturers
While Taiwan’s Hong Fu Industrial Group might not be a household name, its significant presence in the global trainer market is undeniable. As the world’s second-largest producer of sports shoes, Hong Fu manufactures footwear for industry giants such as Nike, Converse, Adidas, and Puma, turning out approximately 200 million pairs annually. This substantial output underscores the importance of the trainer industry and the strategic interest of major players like Hong Fu in emerging markets like India.
Hong Fu’s recent substantial investment in India’s footwear market has garnered significant attention within the industry. The company is currently constructing a massive production facility in Panapakkam, Tamil Nadu, South Eastern India. Upon reaching full operational capacity within the next three to five years, this plant is projected to produce 25 million pairs of shoes each year and provide employment for up to 25,000 individuals. This move highlights India’s increasing appeal as a manufacturing hub for the global footwear sector, particularly for sports shoes and trainers.
Strategic Investment Driven by Market Saturation
Aqeel Panaruna, chairman of Florence Shoe Company and an Indian partner in the project, stated that Hong Fu’s investment is a strategic response to global market dynamics. “The international market is saturated, and they [Hong Fu] were seeking a new market,” he explained, emphasizing the attractiveness of India’s burgeoning footwear demand. Mr. Panaruna further noted the rising preference for non-leather footwear in India, identifying it as a sector with “huge potential” for growth and expansion.
Government Initiatives to Boost Footwear Standards
The Indian government actively encourages foreign investment in the sector, aiming to elevate standards within the domestic footwear industry and enhance export capabilities. To stimulate improvements, the Bureau of Indian Standards (BIS) implemented new quality regulations in August for all footwear products sold across India. These standards mandate rigorous testing of materials, including assessments of strength and flexibility, ensuring higher quality footwear for consumers.
Elevating Product Quality and Consumer Protection
Sandeep Sharma, a journalist and expert in the footwear industry, believes the new BIS standards are crucial for market regulation. “These BIS standards are really about cleaning up the market. We’ve had too many low-quality products flooding in, and consumers deserve better,” Sharma asserted, highlighting the government’s commitment to consumer protection and quality control within the footwear market.
The Unorganized Sector and Affordable Footwear
Despite the growth of branded footwear, a significant portion of the Indian population relies on affordable options from the unorganized sector. This vast network of small-scale shoemakers caters to consumers who cannot afford premium brands. It is estimated that these affordable products constitute approximately two-thirds of the total Indian footwear market, demonstrating the sector’s substantial reach and economic significance.
Agra’s Shoe Manufacturing Hub
Ashok, who withheld his full name, operates within this unorganized sector in Agra, Northern India, a major shoe manufacturing district. He estimates that around 2 million pairs of shoes are produced daily by similar operations throughout Agra. “Many consumers, especially in rural and lower-income urban areas, opt for cheaper local footwear instead of branded options,” Ashok explained, highlighting the critical role of small manufacturers in meeting diverse consumer needs.
Challenges for Branded Footwear Expansion
Ashok further elaborated on the challenges faced by organized brands in expanding their retail presence in semi-urban and rural regions. “Many organised brands struggle to expand their retail footprint in semi-urban and rural areas because we cater to them,” he stated, underscoring the entrenched market position of local manufacturers in these areas.
Navigating New Standards: Impact on Small Businesses
The introduction of new government standards raises questions about their impact on unorganized manufacturers like Ashok. Mr. Sharma acknowledges the complexity of the situation. “It’s complicated,” he stated, recognizing the delicate balance the government must strike between regulation and economic stability. “I think the government is trying to walk a tightrope here. They can’t just shut down thousands of small businesses that employ millions of people – that would be economic suicide.”
Carrot-and-Stick Approach to Industry Upgrade
Sharma suggests a nuanced approach from the government, combining regulatory pressure with support for small businesses. “What I’m seeing is more of a carrot-and-stick approach. They’re pushing for standards, but also rolling out programs to help small manufacturers upgrade their processes. It’s not about wiping out the unorganised sector but gradually bringing them into the fold,” he elaborated, indicating a strategy of gradual integration and improvement rather than immediate disruption.
Counterfeit Goods and Global Concerns
Adding further complexity, the unorganized sector is also known for producing counterfeit footwear, imitating major international brands. While these products are popular among Indian consumers seeking budget-friendly style, they have drawn complaints from other countries due to associated financial losses and intellectual property infringements.
Emergence of Innovative Indian Trainer Brands
Concurrently, a wave of new Indian trainer brands is emerging, targeting India’s expanding middle class and focusing on innovation and quality. Sabhib Agrawal, with his company Zen Barefoot, is attempting to popularize barefoot footwear, emphasizing the health benefits of shoes designed to mimic natural foot movement. Agrawal notes the relative lack of innovation within the broader Indian footwear industry. “There are very few people who are ready to take time and invest in new technologies here. Indian manufacturing is a very profit- first market, ROI [return on investment] driven,” he explained, pointing to the prevailing focus on immediate profitability.
Challenges to Innovation and Government Support
Agrawal also suggests that limited government support hampers innovation. “And in a lot of cases, even the government is not ready to enable these industries through grants or tax relief, which makes it quite difficult,” he added, highlighting the need for supportive policies to foster technological advancement in the sector.
Comet: A Homegrown Innovator
Comet is presented as an example of an Indian firm striving for innovation. The company asserts its position as the first domestic trainer brand managing its entire production chain, from initial design to final manufacturing. Founder Utkarsh Gupta emphasizes the advantages of this control. “This level of control allows us to experiment with materials, introduce innovative silhouettes, and continuously refine comfort and fit based on real feedback,” he stated, highlighting the focus on quality and adaptation to the Indian market.
Adapting to Indian Conditions and Future Growth
Gupta explains that Comet shoes are specifically designed for India’s climate and road conditions. He noted the quality issues with readily available soles and Comet’s commitment to in-house development for superior products. He anticipates significant changes in the footwear sector. “The shift to high value is now happening,” Gupta asserted. “Many high value brands need to move their manufacturing to India. In 3-5 years, we should have a robust ecosystem to compete in the international sneaker market,” projecting a positive outlook for the Indian trainer industry’s global competitiveness.
Future Outlook and the Unorganized Sector
Back in Agra, Ashok expresses concern for the unorganized sector amidst industry growth. “The government should give us accreditation and certificates so our factories don’t close down. Once we too are included in the organised sector no one can beat India in the shoe manufacturing industry,” he proposed, advocating for formal recognition and integration to ensure the sector’s continued viability. Mr. Sharma acknowledges the inevitability of market shifts. “The market is definitely going to shift. We’ll see the bigger players getting bigger – they have the money to adapt quickly,” Sharma noted. “But I don’t think the small guys will disappear completely. The smart ones will find their niche,” he concluded, suggesting a future where both large and niche players coexist within a transforming Indian footwear market.