Once back in my hometown, Chandigarh, I borrowed about $300 from my father, managed to get the shirts made and headed to the airline office. That’s when I first encountered the “license raj,” or infamous Indian bureaucracy. I had no idea of all the permits one needed to do business, but I got the order shipped. The shirts sold like hot cakes in London, where everything Indian was in vogue.
Then suddenly, in the mid-1970s, no one wanted our shirts. The Indian fad was over. I was stuck with piles of worthless shirts. But I had learned a valuable lesson: in the garment business you have to make fashion, not follow fads. With that realization I set up a small apparel factory in a New Delhi suburb in the early 1980s, employing 250 workers with new Japanese sewing machines. Today we employ 24,000 workers in 22 plants making 150,000 garments daily, with revenue that will top $180 million this year, compared with $118 million last year. And I see no limit to the potential of India’s apparel industry–both as a profitable business and a source of jobs and stability for a nation with millions of rural unemployed.
It’s a bit hard to believe how far we’ve come. When I started, people called my investment my “Taj Mahal,” or monumental folly. The bureaucratic obstacles to going global were enormous, with restrictions on foreign travel and on the amount of foreign currency you could take abroad. At one point you could only get $8 per trip overseas. The bureaucrats in the dreaded Enforcement Directorate called at all hours, asking for explanations of each order. If your customer abroad failed to pay for a shipment on time, the Enforcement Directorate could detain you on suspicion of laundering foreign currency. I remember sitting at night outside the offices of petty bureaucrats who had summoned me to explain my export applications. Of course, all they wanted was to get their palms greased.
The contrast between India and China at this time was stark. While Beijing created financial incentives and modern roads for its apparel industry, Indian entrepreneurs were haggling with meddlesome bureaucrats. This torture went on until economic reform gained momentum in the mid-1990s.
Despite the odds, I was staying afloat. My breakthrough came in the mid-1980s when I persuaded a Liz Claiborne executive to tour my factory. He was impressed, and gave me an order for 2,200 dresses. I managed to charm a key bureaucrat into expediting an import of high-quality fabric from Taiwan, delivered the dresses on time, and new orders started pouring in. I opened a factory equipped with new Japanese and German machines. Liz Claiborne even stationed one of its designers at my factory for one year–at its own cost–to oversee and train our employees. That gave us a great sense of Western professionalism and modern business values.
I came to see that the key to success in the globalizing apparel market is to be involved in design and development with the customer. We have forged strategic connections with top brands–Ralph Lauren, Banana Republic, Tommy Hilfiger, Nike, Levi’s–and department stores. From Orient Craft’s office in New York our designers work closely with customers in developing next season’s fashions, designs and fabrics. We don’t just make clothes, we design them. India’s creative edge is huge. We successfully compete with China because we make a better product.
India’s garment industry will ship $8.7 billion in exports this year–a pittance compared with China’s $71 billion. But with the European Union and the United States beginning to impose restrictions on Chinese exports, which boomed after the abolition of global textile export quotas in 2005, India has greater potential to grow. I believe Indian apparel exports will triple to $25 billion annually by 2010.
Today the Indian bureaucracy is off our backs, but hurdles remain. Paralyzing congestion at our seaports means it takes me one month–twice as long as a producer in Sri Lanka–just to move a shipment out of the harbor. To compete we have to do things smarter, so I am building a $200 million, 650-acre special economic zone in the state of Haryana just outside New Delhi that will house 100 garment manufacturers, including Orient Craft. This will help let us stay ahead of the game.
