Textile major is set to launch a new studio in London as the company looks to capitalise on rising global demand for India-made garments amid supply chain diversification away from Bangladesh and Vietnam.
The studio, which will showcase Arvind’s entire garment collection to international buyers, is part of the company’s broader strategy to build an investment-light global sourcing and manufacturing network ahead of the proposed India-UK and India-EU free trade agreements (FTAs). “The challenge there (in UK and EU) is our garment capacity. They want to buy way more from us than we have capacity to offer. In fact we are opening a studio in London where our entire collection will be available and we are tying up with a lot of partner facilities,” Punit Lalbhai, Vice Chairman of Arvind Limited, told investors on Saturday.
Global shift
Lalbhai said that the FTA with UK could happen “any moment”, while the EU FTA could come into force by end of the year. According to him, global brands are increasingly looking at India as a preferred sourcing destination as they seek to derisk manufacturing dependence on Bangladesh and Vietnam. “The demand to buy from India is very high among global buyers needing to derisk Bangladesh and Vietnam particularly. India will always be a preferred destination to source garments,” he said.
However, he noted that India’s apparel industry is currently constrained by manufacturing capacity rather than demand. “The challenge in India is the supply constraint. Our garment industry is not growing because we do not have capacity. The moment we create capacity, growth will come,” Lalbhai said.
Arvind said the London studio will support its strategy of building “virtual vertical supply chains” by integrating its own manufacturing with long-standing partner facilities across multiple geographies. “We have plenty of fabric capacity. We have capacity constraints in garmenting because our existing customers also want to grow with us in garmenting so they get first preference. When we have to offer capacities to new clients in these FTA geographies we are trying to partner and build virtual vertical supply chains and that will be fuelled by the new studio that we are creating,” Lalbhai said.
New partnerships
The company already works with strategic manufacturing partners in Sri Lanka and Bangladesh and is now expanding those relationships further. “For partner facilities, we already partner with quite a few strategic vendors, some of which we have been working for decades. We will dial up our engagements with these people and maybe add one or two relationships like that to be able to cater to the additional demand once these FTAs are in force,” he said.
Arvind is also adding new partnerships in Bangladesh and Egypt, including for denim and fashion textiles manufacturing. “We already have strong partnerships in both Sri Lanka and Bangladesh. These are historic partnerships. We are adding one new partnership in Bangladesh and Egypt,” Lalbhai said.
The company is pursuing an investment-light expansion strategy while simultaneously scaling garmenting capacity. “We want to go with an investment-light model where we invest in very strategic debottlenecking assets or capability enhancement or quality control equipment,” he said.
Arvind is also expanding knitting capacity, increasing printing capabilities and adding debottlenecking capex across fabrics and Advanced Materials. “In Garments we will grow the capacity by 20 per cent this year. Advanced Materials we are putting in capexes in India business to grow at 18-20 per cent,” Lalbhai said. The company had targeted upto ₹500 crore capex in FY27.