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The global cosmetic giant L’Oreal has its brand endorsed by the reigning beauty queen, Aishwarya Rai. Aishwarya’s wedding to India’s biggest brand in the film industry; Abhishek Bachchan fetched the brand a fair deal of publicity as well.

Rai, a former Miss World and the famous Bollywood actress has been in the limelight for quite sometime. Her recent wedding has proved to be a boon for the brands, especially the ones that she is endorsing. As her much publicized wedding and success reaches dizzying heights, the brands are making the most of it by publicizing themselves beyond salvation.

When Sushmita Sen and Aishwarya Rai walked away with the Miss Universe and Miss World title respectively, it changed the face of the Indian cosmetic and fashion market. With women becoming more fashion conscious and aware of skin care and cosmetic products, it proved to be a precursor for the global cosmetic giants to foray into the Indian market.

Since then there has been no looking back as the market is growing at a rapid pace. International designer brands like Chanel, Estee Lauder, YSL, and L’Oreal have launched themselves successfully in India and many more brands will continue to make a beeline for the Indian market.
Both women and men in India are all agog about personal grooming and beautifying themselves. Catering to these demands, India is witnessing many international brands foraying into the market. One such brand, “Face Cosmetics” has its eyes firmly fixed on India as its next target market. The announcements on the above are expected to be made soon. While announcing its half-yearly report, the company said it expects to arrange for the funds needed for the proposed JV by the second quarter of this year. The Company further announced that it has recently signed a Memorandum of Understanding with a superior and well established personal care products manufacturer in order to launch a chain of spas across the nation.

The reason why the global czars are targeting India as their next prime market is because there is an annual rise of over 20% in the number of high-net worth individuals in the country, which includes a significant percentage of women.

Although India’s beauty market is just 10% of the global market of over USD 36 bn, market analysts believe that low per capita spending on these products so far offers impressive growth opportunities.

In a report by Euromonitor which studies and monitors business growth opportunities across the world for European firms, states that India’s USD 3.5 bn market has grown over 60% from the late 1990s. For over a decade, a fair deal of research and study was done by the MNCs such as L’Oreal before they set their anchors in India. Today L’Oreal in India has come a long way since its first launch here in the 1990s and witnessed a sales figure of over 40% last year.

Following suit was Chanel which recorded 50% growth in its India business last year and expects this to continue in the coming years. As of now, the company has a total of 5 stores operational in India, and recently launched its new store in Bangalore. Chanel India Managing Director Xavier Bertrand said “We will be expanding selectively since we need to find the appropriate retail environment for our range. We hope to have 15-25% of sales in the retail space in the next three years”.

The textile industry plays a significant role in shaping the Indian economy as it is instrumental in generating mass employment for Indians. The year 2005 saw considerable growth for the Indian textile sector in terms of exports and record production. Then 2006 witnessed an ebb in its growth and exports have fallen considerably in 2007.

The significant pointer of the export trends to the US indicate the overall status of this sector as it accounts for 35% of apparel exports from India. In terms of quantity, February 2007 saw a decline of 2.9% in exports to the US. This can be largely contributed to the 1.05% appreciation in rupee during February, 07 compared to January, 07. Appreciation proves to be quite unfavorable for the exporters as the export costs go higher. This forces the suppliers to move to lower cost sourcing destinations or shifting the imports from India to lower value goods. The decline in terms of quantity and the 10.5% decline in unit value realization of apparel exports to US is a manifestation of the above conundrum during January 2007, compared to January 2006.

A preference for low cost suppliers is a practical move by the importers given the fact that the rupee appreciation comes at a time when most of our competing countries have witnessed currency depreciation. Comparing the exchange rates for April 2007 to April 2006 reveals that while the rupee appreciated 5.5%; Pakistan rupee, Turkish lira, Indonesian rupiah and Hong Kong dollar depreciated against US$ by about 1.3%, 0.72%, 2.3% and 0.72% respectively. The Chinese Yuan has appreciated by 7.24% which has resulted in the growth in Chinese exports of clothing.

The rupee appreciation is expected to lead to a major loss in revenue for the exporters. The recent appreciation is expected to reduce export receipts of apparel exporters from Rs 20484 cr in the first half of 2006-07, to Rs 19181 cr during second half of the year, given the same rate of exports. This is a dip of 6.3% in export revenues. In a letter issued to the Textile, Commerce and Finance Ministers by Mr. Vijay Agarwal, Chairman Apparel Export Promotion Council (AEPC) stated “The currency appreciation loss is usually borne by the exporter, at the cost of reducing profit margins, which are already low for the apparel exporters. The exporters are already burdened with disadvantages like rigidities in labour laws that restrict the garment industry to SMEs, high transaction cost that negates other cost advantages available to the sector and infrastructure weaknesses which have been infusing production inefficiencies in clothing industry.”

In a bid to restrict further appreciation of the rupee, Mr. Agarwal has expressed concern on behalf of the textile industry in order to meet export targets and iron out the complexities in exports that have arisen as well as restore healthy competitiveness within the industry. Furthermore, the industry is making efforts to seek government support to iron the complexities involved in the Indian export infrastructure as well as lower he cost of capital in order to maintain consistent growth of exports.

“Sourcing Apparel from India” is a recent addition of Research and Markets Reports according to a recent announcement. India ranks very high among the world’s leading apparel exporters. It has an abundant domestic cotton supply, and cotton items account for about three-quarters of its apparel exports. In fact, 13 of the 14 major clothing types exported from India to the EU comprise of cotton products.

The basic infrastructure of the industry is rather flexible in terms of taking up small customized orders and ability to make quick changes if required. This is primarily due t the existence of an array of small scale enterprises within the industry. The genesis of trend can be traced down to past government policies which aimed at generating mass employment and leading to economic growth per se. Hence the Indian government reserved the production of products like woven and knitted apparel for exclusive production by small-scale units. However, the policy witnessed a gradual termination and, encouraged by the elimination of the global quota system at the end of 2004, the number of biggies in the industry is growing at a substantial pace.

The export of Indian apparel is largely contributed by countries like EU and the US. The UAE has an 8% share but it is thought that most UAE imports are re-exported. In 2005 India was the third largest apparel exporter to the USA and the fifth largest supplier to the EU.