Italian shoemakers eye India

New Delhi: High-end and super-expensive Italian shoemakers are looking at India as a replacement for their production base in Europe, increasingly a high-cost location for them. These brand manufacturers are also scouting for local partners. Some of these are leading brands such as Baldinini, LORIBLU, Giovanni Fabiani, NeroGiardini, Janet & Janet, FABI and Fratesi.

Another attraction is growing demand here for their products, unlike in Europe, though their footwear could cost anything between Rs 29,000 to Rs 1 lakh for a pair.

“Italian producers and manufacturers are looking for countries where the labour cost is lower, which is why they are looking at India,” Amedeo Scarpa, trade promotion attaché at the Italian embassy, told Business Standard.

He said these brands were exploring markets in the BRICS (Brazil, Russia, India. China and South Africa) countries, where the raw material cost is lower than in Europe. Analysts said China could give competition to India in this respect but India was increasingly having the advantage in terms of cost of labour.

“We are looking at more and more joint ventures and collaborations with Indian producers because Indian industry gives us the volume that these companies are now looking for,” said Scarpa. Around 40 high-end European leather and footwear brands, including those from Italy, Germany, France, the UK, Spain and Austria, are going to showcase their products at the Expo Riva Schuh India, an international shoes and leather accessories show, here on July 4-6.

“We want to shift from a concept of ‘Made in Italy’ to ‘Made with Italy’ as we go for more and more joint collaborations. This will be our way in entering the market,” said Scarpa. Adding, however, that the Indian market had a lot of trade barriers which sometimes affect the ease of doing business here.

“We have to find the part of the global value chain and where there is competitiveness. So, the more you lower your barriers, the more attractive investment destination you will be,” he said. Italian companies, said Scarpa, were also eagerly waiting for the India-European Union free trade agreement (FTA), under negotiation for a long while, to be signed. It could help them get more access to the Indian market, with the lowering of tariffs.

According to Carla Costa, fair manager of Riva Del Garda Fierecongressi, the demand for shoes of this type which can cost ¤^400-2,000 (Rs 28,780-144,000) each, was growing in India.

In Europe, the number of buyers are declining. Besides shoes, these brands also produce luxury bags, belts and wallets.

“India has a huge population and demand for such goods is on a rise here compared to Europe, where buyers are not ready to buy these costly shoes. So, we are now looking to go out of Europe. Prices in Europe are very high. The real demand is here,” adds Costa.

Overall, the Indian footwear market is estimated at about Rs 19,900 crore, with a yearly growth rate of eight to 10 per cent. The market includes casual, formal, semi-formal and sports shoes, along with sandals for men and women.

The men’s segment is 59 per cent of the market. The overall share of organised retail is 20 per cent and is expected to reach 25-30 per cent by 2015.

Of the total market, the super-rich segment might constitute only a small portion but Italians believe it would still be higher than demand for their products in Europe, facing low economic growth.