Exporting Cotton Handbags
HS Code : 42022220
Fuelled by growing preference towards environment-friendly products, export of cotton handbags from India has been witnessing a steady growth over the last few years. What’s intriguing though is that there are still not many brands that India can boast of in this product category. But, a little marketing push from the government can go a long way in creating several brands and boosting its export from the country.
To an avid handbag aficionado, a stylish handbag made of suede or leather is the first attention-grabber. And that exemplifies the usual lack of consumer awareness towards cotton handbags in the domestic market. Mainly due to the lack of strong brand equity, cotton handbags so far haven’t been able to capture the consumer mind-share in India, let alone the consumer wallet share. However, what’s interesting is that India has been exporting over $100 million worth of cotton handbags over the last few years. And the growth story has been really promising in several markets away from India.
According to the data provided by the Cotton Textiles Export Promotion Council (Texprocil), the percentage share of exports of cotton handbags or shopping bags of cotton compared to handbags made of other materials is the highest among the lot – 58.70% in FY2016 as against 22.81% for jute hand bags, 17.17% for other materials and 1.30% in the case of handbags or shopping bags of artificial plastic material. Some of the top export markets for cotton handbags from India are USA, UK, Germany and Spain, with the first two countries accounting for about half of India’s exports of the product.
In FY2016, while USA imported cotton bags worth $30.42 million from India, UK and Germany clocked imports worth $23.08 million and $18.18 million, respectively. Other countries where India has made substantial exports of cotton handbags are France, Spain, Japan, Australia, Belgium, Italy, among others. Overall, exports of cotton bags from India grew at 6.2% y-o-y in FY2016 and industry experts expect this number to only go up, going forward.
Meanwhile, China has emerged as the leading exporters of cotton handbags exporting handbags worth over $1.3 billion annually (CY2015). On the other hand, India’s exports of the product stood at $126.31 million in FY2016. This obviously means that India needs to up its exports ante if it really wants to garner a larger market share. And there is definitely a huge scope for growth.
Exporters are also of the view that cotton handbag as a product category lack a strong promotional push from the government. Cotton handbags should be promoted more aggressively in international markets to increase India’s market share
Government support to market cotton bags internationally, especially to help exporters in participating in trade shows and fund sampling, is the need of the hour. It will also give a platform to young entrepreneurs to showcase their differentiated offerings. All these efforts can lead to enhanced visibility and benefit exporters who are trying to gain a strong foothold in overseas markets
It’s because of lack of promotion that no Indian brand has till now been able to dominate foreign markets in the cotton handbags segment, despite India being one of the leading exporters. Creating brands has remained a weak spot for India, not jut in this product category but across the entire textile value chain.
ypically, an exporter can command margins of about 10-15% in this trade. However, to expand the growth spectrum, experts feel, one has to improve manufacturing standards, add value-led features and design detailing such as embroidery elements, mirror work and contemporary elements to make the cotton handbags more appealing. “Initiatives like Skill India and government’s efforts to improve ease of doing business will provide the impetus to the Indian cotton handbags industry. The focus should be on exporting value-added cotton handbags to achieve sustained growth in export volumes,
“Exporters can command profit margins of 10-15%”
Q&A by
Dinesh Gupta President, Sekawati Group of Companies
Q. How is your exports of cotton handbags growing?
A. We are completely into exports and we have witnessed over 10% y-o-y increase in our sales this year. We are mainly exporting to USA, Canada, UK and Japan and we have plans to expand our exports to other countries in South Africa, Latin America and Europe.
Q. What factors are behind the growing demand for cotton handbags?
A. Cotton handbags are becoming extremely popular due to their eco-friendly nature. Women, in particular, prefer to go for cotton bags; they are ideal for day-to-day use and are economic. During my recent visit to Japan, I saw six out of ten women using cotton handbags – for me this is an encouraging sign.
Q. Consumers are still attracted towards handbags made of leather more than cotton handbags. How do we catapult cotton handbags to the high-end product range in foreign markets?
A. It is possible to make high-end bags using cotton which are at par with bags made from leather or other materials in terms of looks. And we can create a market for such luxury cotton handbags, as people will be more inclined to buy these environment-friendly bags.
Q. How challenges is it for Indian exporters to compete with big handbag brands abroad?
A. It is challenges to compete with big and established handbag brands. I think it is possible to compete with them if we create consumer awareness on the harmful effects of leather, vinyl and polyester bags on the environment. In fact, the big brands are also planning to come up with cotton handbags
Q. How do you view the government’s role in encouraging and promoting cotton handbags exports?
A. he government should undertake some major initiatives to encourage Indian companies to export cotton handbags. First of all, the government should launch a comprehensive campaign to promote cotton handbags and create awareness among people, which will explain the benefit of using cotton handbags. Also, the government should offer support to the manufacturers & merchant exporter who will then feel encouraged to boost exports.
Q. India is one of the leading exporters of cotton products. Why do you think no Indian brand has been able to dominate the foreign markets in the cotton handbags category?
A. This is because no one has seriously and aggressively tried to market cotton handbags under a brand name in foreign markets. The majority of Indian manufacturers make cotton handbags as per the requirements of their overseas bulk buyers, who procure these products to sell under their own brand name.
Q. What kind of profit margins can an exporter expect in this trade? How can these margins be enhanced?
A. Exporters can command profit margin of 10-15%, which is good. However, if Indian suppliers create and develop their own cotton handbags brands and promote them in overseas markets intelligently, they can earn a healthy profit. To increase margins, they can even enhance their overseas presence by opening offices in various strategic locations when business grow.