Uniqlo plans to increase its production in India
Uniqlo, Asia’s biggest clothing firm, said it’s on schedule to make more than 30% of the products it sells in India within the country as it expands beyond northern markets. The Japanese brand, which is opening its first store in Mumbai next month, said made-in-India products already account for more than 30%, taking into account exports for global supplies. “The target obviously is not just 30%, but the idea is to take 100%. But we have to increase Indian business first,” said Tomohiko Sei, CEO of Uniqlo India. “Mumbai sales are already very high online and opening stores will help expand the business further.”
For single-brand retail, 100% foreign direct investment (FDI) is allowed but if the foreign investment exceeds 51%, then sourcing 30% of the value of goods procured is mandatory from India. However, the government amended the rule two years ago by allowing foreign retailers to fulfill their local sourcing requirements by procuring goods produced in units based in special economic zones. Uniqlo opened its first door in the country in September 2019, but stringent lockdown measures announced in March 2020 to contain the Covid-19 outbreak delayed its store expansion plans, restricting its store count to about ten outlets so far.
The company’s first Mumbai store will be in Phoenix Marketcity, Kurla, and spread across 11,500 sq ft, while the second, 7,500 sq ft store will be in Oberoi Mall in Goregaon East. Over the past decade, global brands Zara and H&M have become market leaders in the fast fashion segment in India. Rivals, including Levi's, Gap and H&M, have been expanding their store network aggressively. “Indians like affordable pricing but high-quality clothing. We want to be in India for 100 years and don’t have a short-term vision in store numbers and sales targets,” said Sei. “We are not just chasing fashion. The store target number is not our purpose, and product quality is the main focus.” In 2021-22, Uniqlo India’s sales increased 63% year-on-year to Rs 391.7 crore, slower than in the previous year, when it clocked 86% sales growth on a lower base. However, the company said India remains among its top performers globally in terms of growth and is not seeing any slowdown.
For single-brand retail, 100% foreign direct investment (FDI) is allowed but if the foreign investment exceeds 51%, then sourcing 30% of the value of goods procured is mandatory from India. However, the government amended the rule two years ago by allowing foreign retailers to fulfill their local sourcing requirements by procuring goods produced in units based in special economic zones. Uniqlo opened its first door in the country in September 2019, but stringent lockdown measures announced in March 2020 to contain the Covid-19 outbreak delayed its store expansion plans, restricting its store count to about ten outlets so far.
The company’s first Mumbai store will be in Phoenix Marketcity, Kurla, and spread across 11,500 sq ft, while the second, 7,500 sq ft store will be in Oberoi Mall in Goregaon East. Over the past decade, global brands Zara and H&M have become market leaders in the fast fashion segment in India. Rivals, including Levi's, Gap and H&M, have been expanding their store network aggressively. “Indians like affordable pricing but high-quality clothing. We want to be in India for 100 years and don’t have a short-term vision in store numbers and sales targets,” said Sei. “We are not just chasing fashion. The store target number is not our purpose, and product quality is the main focus.” In 2021-22, Uniqlo India’s sales increased 63% year-on-year to Rs 391.7 crore, slower than in the previous year, when it clocked 86% sales growth on a lower base. However, the company said India remains among its top performers globally in terms of growth and is not seeing any slowdown.
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