In China+1 plan, Chennai right fit for non-leather footwear majors

Several suppliers of non-leather footwear players like Nike, Adidas, Puma, and Reebok have either set up their units in Tamil Nadu or are close to sealing a deal

The recently concluded Global Investors Meet in Tamil Nadu has illustrated how companies are shifting their focus from China to Chennai in a key sector like non-leather footwear manufacturing, as companies are aggressively pushing for a “China Plus One” strategy to diversify production and bolster supply chains.

Several suppliers of non-leather footwear players like Nike, Adidas, Puma, and Reebok have either set up units in Tamil Nadu or are close to sealing a deal in the state. On Tuesday, Long Yin Investment, TKG Taekwang, and Hong Fu Industrial Group signed deals with the Tamil Nadu government to set up non-leather footwear manufacturing units. 

During the summit, Long Yin Investment inked pacts to the tune of Rs 500 crore and create 10,000 jobs, while TKG Taekwang plans to invest Rs 1,250 crore to create 9,000 jobs. Hong Fu Industrial Group also plans to splurge Rs 1,500 crore in the state and create 22,000 jobs.

In addition, companies like Pou Chen Corporation, Feng Tay Enterprises Co, Shoe Town, Oasis Footwear, Sports Gear Co, and Zucca have already set up or are in the process of setting up their units in Tamil Nadu.

In terms of global footwear production, China tops the list with 54.6 per cent, out of which, 71.3 per cent is exports, according to data by the World Footwear Yearbook 2023. India holds the second spot in production at 10.9 per cent, where only 11 per cent of its production is exported. India's export orientation is low compared to China because of its limited product offerings. India is focused predominantly on leather-based footwear. 

“In India, 90 per cent of footwear sold is in the non-leather sector. The majority of our production is leather. We are not focusing on this due to a lack of component support. Various geo-political developments are happening. Everybody wants to have a China plus one strategy. Everyone goes to a country which is strong and stable in policies and good availability of workforce. This is a labour intensive industry and hence it is advantageous for Tamil Nadu,” said N Mohan, director and chief executive officer (footwear business) of Kothari Industrial Corporation.  

Mohan’s company, along with ShoeTown Group is planning to hire 50,000 people in Tamil Nadu. In November last year, J R One Kothari started a manufacturing plant to produce Crocs brand of footwear in Perambalur district.

The Kothari Group has invested Rs 400 crore in the plant at State Industries Promotion Corporation of Tamil Nadu’s (SIPCOT) Park for the first phase which will provide jobs to 4,000 people.

“‘China Plus One’ strategy is a blessing for Indian manufacturing, especially in non-leather footwear which is a fast-growing segment all across the globe in footwear,” said V K C Razak, managing director of VKC Group.

“We have to understand two sets of pairs here. One set is scale and skill. We have to understand the nuances and process of scale operations. The second set is the domestic market and export market. India itself is a fast-growing market and we can have growth in the domestic production as well with the spillover of advanced technology and processes from these global giants,” Razak said.

According to industry assessment, it creates 425 jobs for every 1,000 pairs of footwear manufactured. According to the World Footwear Year Book, in terms of exports, India’s global share of footwear is minuscule, accounting for barely 1.5 per cent.

Interestingly, while the share of leather footwear in exports is 6 per cent globally, non-leather numbers are insignificant.

“Today, the size of the footwear industry is expected to be around $12 billion in India. By 2030, we expect this to touch $50 billion, which can generate employment opportunities,” Mohan added.