India’s comprehensive economic partnership agreement (CEPA) with Japan under which textile raw material can be imported duty-free has been highlighted as a big plus in talks with Uniqlo. It has also been promised stand alone buyer seller meet to explore possibilities .
Currently, Uniqlo sources apparel from China, Vietnam, Bangladesh and Indonesia.
While brands such as Uniqlo and GAP are waiting for the right opportunity to set up stores in India, other single-brand majors such as Zara and Marks & Spencer already operate in India through local partnerships. H&M, too, has been cleared by the Indian government to run business in the country and is expected to open stores this year.
In 2012, the UPA government raised the foreign investment level to 100 per cent from 51 per cent earlier in single-brand retailing. Even so, not many marquee brands have come on their own, primarily because of the hurdle of 30 per cent local sourcing, preferably from small and medium industries. Furniture major IKEA and fashion chain H&M are the only exceptions to file their applications to invest in India.
Uniqlo is believed to have risen from roadside chains to one of the biggest apparel retailers in Asia.
It runs over 2,000 outlets worldwide. The company has also been in the news for talks with textile and apparel company Arvind for setting up stores in India. However, subsequently the tie-up didn’t materialise.
With sales dropping off in Japan, its home base, Fast Retailing has been aggressively expanding overseas. As of the end of May, Uniqlo had approximately 860 stores in Japan. The brand plans to expand sales in each store rather than increase the number of outlets in Japan.
Overseas businesses have been doing well for Uniqlo. That success is especially significant in China, where Uniqlo continues to open a number of retail stores, including one in Shanghai that opened last September. It is Uniqlo’s largest outlet in terms of floor space.
After expanding into the German market in April, Uniqlo currently operates more than 500 overseas stores in 15 nations and regions.
Although Uniqlo’s domestic sales for the fiscal year ending this August are expected to increase only 5 percent to 700 billion yen ($6.88 billion), the company is projecting a 1.6-fold increase to 400 billion yen in sales overseas.
While the Indian retail market is pegged at about $600 billion, the country’s textile and clothing value chain is worth $90 billion. Clothing sector exports are at about $15 billion.