Indian apparel industry moving beyond transparency

by Dheeraj Tagra

27-May-2019  |  28 mins read

Transparency

In India, even today, many sewing operators who are working in apparel manufacturing units for months or for even years do not know the name of their factories. The address of their factory and the name of their supervisor is the maximum that they know about. On the other hand, H&M is the first retailer across the globe to list individual supplier details for each garment on its website to increase transparency in an industry with high risks of slavery and labour abuses. There are many more such examples at local as well as global levels which have direct or indirect relation with sustainability and transparency aspects of the fashion industry. From decades, industry experts strongly believe that there is no sustainability without transparency. Amidst all this discussion, where does India stand…What is the opinion and experience of the Indian apparel industry on transparency? Apparel Resources explored this issue with various stakeholders from the industry. As expected, there is a difference of opinion on this topic, but all of them agree that transparency is the best policy for sustainable business and for a better tomorrow.

Transparency in Indian apparel industry

As per experts, though Indian industry is a cut above China, Bangladesh and Vietnam, overall Indian apparel industry (the majority of giants as well as SMEs) is not in a strong position. Most of the larger players in the industry and also the medium and smaller ones involved in exports have moved towards adopting transparent practices as it has become the need of the hour but the industry as a whole is yet to cover lots of ground in this regard. Transparency is a powerful tool for focusing on labour abuses and factory-related dangers, and advocates critical information about where to turn to for problems. This makes workers believe that brands profiting from their labour will hear about their struggles and intervene.

“It is better than what it used to be but the industry has a long way to go; on one hand, we have examples of Toyota, Fast Cap and Suzuki which have dedicated certain days of the month for people to go and see their practices, and on the other hand, many doors of our industry are so tightly closed that even for their own benefit, they are not willing to open,” bemoans Sunaina Khanna, Director, Methods Apparel Consultancy, Gurgaon. The company supports apparel manufacturers with its integrated software packages and industry-specific training. In some cases, there are some grey areas which need to be taken up on priority. Gurminder Matharu, Country Manager, Colveta India, Gurgaon feels that the only hidden part sometimes is the longer working hours or no holiday in a week and that too when buying houses stress them to work overnight to get their merchandise out as supplier is running late; also hidden many times is the true cost paid to the labour involved.

To a large extent, manufacturers of the domestic market are yet unaware of the concept of transparency, as they are by and large in the transition phase of getting into the organised sector from an unorganised one and this shaping-up process may take another 2-3 years or more. Meanwhile, more companies are moving towards transparency mode.

Buyers’ efforts, from a suppliers’ viewpoint

International brands and retailers have adopted a practical, optimistic and solution-driven approach towards transparency. To a large extent, their vendors feel comfortable discussing issues with them, instead of hiding it as some of the apparel manufacturers are of the view that this has really helped them in improving the system and work culture. “Buyers do expect statistics that they can use to compare companies. As a manufacturer/supplier/marketer, if you can provide an explanation of your statistics, you justify your company and become memorable,” says Rajiv Dewan, President, Garment Exporters Association of Rajasthan (GEAR), Jaipur and MD, Ma’am Arts, a well-known export house. Many other exporters strongly appreciate that buyers across the continents are pushing factories to be transparent and are true business partners in their growth story.

With respect to the domestic market and looking from a holistic view rather than just sustainability aspect, Vivek Lakra, Director, Superfine Knitters (Ludhiana) feels that as buyers are getting big, they are becoming dominating and are asking suppliers to furnish details that are no more in closed doors like those relating to purchase, open costing, transaction details of four stage back-end suppliers. Superfine Knitters is the only company in the Indian apparel industry (producing for Indian brand and retailers) with state-of-the-art infrastructure, doing business of around Rs. 100 crore.

Being transparent  loss or gain

Even medium-level apparel manufacturers which don’t even have a dedicated Product Development (PD) department are fearful of getting their design copied. In such a mindset/scenario, is being fully transparent easy? Interestingly, apart from satisfying buyers and ensuring law of the land, transparency is also a way of engaging employees. If transparent, management trusts staff and workers with information, and in turn, they reward the company with loyalty. Overall, organisational transparency creates trust among stakeholders, assists in informed decision-making and fosters greater participation. “We have gained credibility, long-lasting relationship, better compliance ratings by being transparent. Being transparent is more than a good policy,” says Archana Tomar Mann, VPCompliance, CSR, Training & Development, Orient Craft (OC), Gurgaon. OC is one of the largest export houses of India.

Adding different views to the same and including important factors like pricing, Vivek Saxena, Director, Moissanite Apparels, Noida says, “We have gained, especially when it comes to ethical pricing, and buyers in return trust and respect us for that. But, at times, we have lost a lot when it comes down to being transparent in adherence to social practices. It is because most of the auditors are concerned only about the ‘paper’ values instead of looking at things with practical values. We are in an industry where the turnover of labour is extremely high and unfortunately 90 per cent of them come from an almost zero educational background.” Moissanite Apparels is a growing export house working with several global brands and retailers.

There are companies like Superfine Knitters which claim to be transparent right from the beginning. Before GST and demonetisation, the company was losing a lot to the unorganised sector, but now, everybody has come to be on a transparent platform, so now it has got an edge.

With regard to the buying community, not only brands and retailers, but also the buying houses strongly claim that they always gain by being transparent. According to Triburg, openness is always appreciated and gets due response, while what Colveta India has gained the most from transparency is the trust of the suppliers and customers. For buying houses as well as suppliers, one of the main reasons for losing business due to transparency is the counter-partner not being transparent.

Collective and collaborative efforts on ground level

Indian apparel industry is vast and spread over more than 15 cities and each city has separate specialisation and big to small players… All this makes collective and collaborative efforts difficult, especially on the ground level. But being more vocal and open on such things, manufacturers can also learn and join hands to promote such initiatives. CXOs of various companies have shared on various platforms as well as with Apparel Resource about how there is a lot of talk about good practices, but in reality, nothing is happening, especially as far as customer relationship is concerned. Though on many fronts like interaction with the Government and policy-making bodies, the industry’s collective and collaborative efforts are much more effective and evident.

Rajiv has a strong point to make here. He states, “There is indeed a need for ‘Collective Governance’. Currently, the world characterised by globalisation; stakeholders increasingly find themselves unable to govern. Corruption is everywhere, natural resources are being exploited, the environment is damaged, markets are distorted, etc. Certain challenges cannot be addressed by entrepreneurs alone. Increasingly, collective governance ‘beyond governments’ is seen as a part of the solution, with state and non-state actors working together. The trick is to communicate in ways all understand and allow incremental growth and refinement.”

This aspect becomes important as transparency about sharing information not only with own brands, partners but with all. There are very few companies who are on the collaborative mode, else the majority is always on the secretive mode and very reluctant to be transparent. And this needs to change for sure. Industry challenges are common like low efficiencies, high absenteeism, poor labour turnover, poor middle management and inadequate HR practices. The collaborative approach will help tremendously and make India more competitive in the world forum.

As far as buying side is concerned, there are very few examples in this regard. “Triburg has moved way above and beyond the concept of a typical ‘buying house’. We believe we are a full-service provider, akin to a ‘direct supplier’. We take complete responsibility for business deliverance,” says Tarun Bakshi, CEO, Triburg, adding, “Industry has been very vocal about a host of issues in the past as well, but personal agendas override collective goodwill. It doesn’t mean we stop trying, but this point needs further deliberation.” According to Gurminder, “The ultimate goal for both our suppliers and also us is to have a successful business with a satisfied customer base.” Therefore collective and collaborative efforts is the only way to survive in the market or any business and that too for the long term; for short term, one can always cut corners and do it their own way.

Disclosing buyers as well as suppliers’ names

No doubt that having buyers as well as suppliers’ names and addresses on own site and other manufacturing sites is a vital part of transparency. Besides, traceability and adherence to international norms for human rights throughout the supply chain have become a very critical factor in maintaining transparency. Experts feel that as the digital revolution has already taken place in India, companies are sweeping vast quantities of data about customers’ activities, both online and offline. In the future, customer data will be a growing source of competitive advantage; gaining consumers’ confidence will be the key. Companies that are transparent about the information they gather, give customers control of their personal data, and offer fair value in return of which they win trust and will earn ongoing and expanded access. Those concealing how they use customers’ personal data, fail to provide value to the customers’ and lose their goodwill and eventually business.

Triburg shared with Apparel Resources in this context that they don’t see a need for such type of disclosures. Even Gurminder is of the view that such transparency is not taken in a positive light as no one wants to share their customers’ names to the whole trade.

On same pitch or not

It is very important that buyers and suppliers should be on the same pitch regarding transparency. There is a strong perception that buyers are on the higher side as they demand the transparency from the suppliers. But in the case of suppliers, they support this concept if they are doing volume business but don’t show adequate interest if they are handling small business. The pitch for the supplier is business-driven.

Tarun feels that Indian suppliers are quite cooperative. Both buyers and the suppliers understand the ground realities, but still, there is lot more to be done on the same pitch. Again, according to Gurminder, it all depends on the suppliers’ eagerness. She further adds in order to motivate Indian suppliers for transparency, her team does CSR visits, conducts remediation meetings and discussions with suppliers but ultimately business is what drives the suppliers to make efforts. Jas Mahindru, Proprietor, Mega-Brands shares that in 80 per cent of the cases, both are on the same pitch, especially where there is inter-dependency.

Steps to increase transparency

With the changing scenario, India has the opportunity to grow now as China is getting expensive. Being transparent is one trait which India can follow to grab opportunity for growth in textiles. Seminars, open forums, workshops should be conducted on a timely basis to ensure an increase in transparency. Aggressive market forces will pressure companies to be more transparent. Multi-stakeholder initiatives, such as brands and international NGOs, can play a more important role in moving the industry toward basic transparency. The Governments should also enforce transparency and other mandatory human rights processes in an apparel company’s supply chain and set standards that truly level the playing field for businesses and workers. “Tragically, the combination of reluctance to regulate companies and overall government apathy has meant that there have been no strong legislative efforts worldwide to address human rights’ concerns in the garment industry,” adds Rajiv.

Tarun sees this from a broader perspective and asserts, “We need to increase our lobbying on this front with EU and US counterparts. It’s our strength, but we haven’t leveraged it well enough.” Gurminder suggests that there can be a centre where all information is provided and which helps the suppliers to go hand-in-hand to reach the required goal. There are many manufacturers and buying houses who think they are not doing something extra for transparency as it comes naturally to them.

“Transparency comes with individuals’ attitude to conduct business…it is more to do with one’s personality,” says Jas. In view of Vivek Saxena, it will be a mandatory process very soon and everyone will have to join hands in this endeavour. “Corrective action plan should be abolished and continuous improvement plan should be in place,” he adds. V.K. Jha, Founder, Aider NGO, Delhi feels that there is a need to conduct a multiple awareness programme for the manufacturers, brands and stakeholders to understand transparency in the systems and their impact on business. “The industry has been gearing itself up for these challenges. Further, the industry shall be required to have an effective compliance function capability to meet its legal and regulatory obligations and promote and sustain a healthy transparent culture of compliance and integrity. Suppliers should step out of their comfort zone and join the transparency trend group. They should commit to sustainable transparency standards. Multi-stake-holders initiatives should also endorse transparency,” he corroborates.

Beyond transparency!

Apart from sustainable activities, disclosing of business strategy, order booking situation, efficiency rate, overall turnover should be a part of transparency or not? Rajiv is of the opinion that organisations practising full transparency are open to attack and are vulnerable to those groups that feel under-represented or alienated. He accepts that it can be difficult to learn to balance transparency keeping some information private, such as competitive trade secrets or other unique information.

“These practices must be transparent but many times business strategies are the USP of the organisations; hence in some scenarios, if everything is too transparent, people can take undue advantage of the available information in the short term. I feel if we find ways to collaborate rather than compete, it can create a win-win situation often,” says Sunaina. Gurminder too agrees on the same and avers, “Absolutely, this should be part of transparency for buying house as well, as when we do this, our supplier base also understands our structure of work, the cost involved and value that we add in between them and customer-hidden agenda is anyway not good for either party.” On the contrary, Tarun disagrees with this as he states, “We are in a commercial world and putting commercial information in public domain is not in anybody’s interest.”

Jas gives a mixed opinion, “We do discuss strategies with our associates and are quite open to a very large extent, but within the practical understanding of each side. Percentage (commission) and profits are personal and I believe one should not discuss this until and unless there is a situation where negotiations or expenses need to be understood by others. Yes, it is evident there is no business without this commission or service charge.”

Starting point

Apparel manufacturers who have not yet moved towards transparency, can start by exploring Transparency Pledge. As per Human Rights Watch:World Report 2018 in 2016, Human Rights Watch joined eight international labour rights groups and global unions advocating for a basic level of transparency in the garment industry. The coalition developed a ‘Transparency Pledge’, a uniform minimum standard for transparency, drawn from industry good practices. The pledge is a modest starting point for company disclosure. Companies can do far more than what the pledge seeks. As usual, industry stakeholders have different opinions, observations or experiences on similar issues and things will keep moving in their organisations as per them, but as a whole, no one can deny that transparency is the best policy in order to move further for sustainable business and for better tomorrow. Leonardo A Bonanni, Founder CEO of Sourcemap strongly believes that committing to supply chain transparency is usually the most effective way to drive the new business processes needed for mapping and traceability.

“Transparency is an open way of working which promotes collaboration between all stakeholders. Triburg has always shared relevant information with all stakeholders. We run one of the most transparent supply chains with a few key European accounts. It’s taken years of work on the ground to get to where we are,” – Tarun Bakshi, CEO, Triburg

“Transparency is the overall view of our product with regard to where it is produced, printed, processed, taking care of the labour involved on the human ground level and open sharing of the movement of our product at all stages. Our organisation has always been transparent and our supplier base is a strong vote for this,” – Gurminder Matharu, Country Manager, Colveta India, Gurgaon

“Transparency embodies honesty and open communication because to be transparent, someone must be willing to share information when it is uncomfortable to do so. As a concept, it is often most visible in the realm of social responsibility and compliance; its real benefit is when it’s seen as a business priority,” – Rajiv Dewan, President, Garment Exporters Association of Rajasthan (GEAR)

“Transparency is honestly fulfilling social compliance requirements and ethical business practices, which includes ‘pricing’ policies also. We are committed to be transparent in our business and impart the same values to our staff too,” – Vivek Saxena, CEO, Triburg

“Transparency means that all business transactions are accounted for, and all Government statutory departments are well linked with the company, and there is a minimal scope of any deviation or tax/entry evasion. We are a public limited company and we are extremely transparent in all respects,” – Vivek Lakra, Director, Superfine Knitters

“Transparency implies openness and accountability, accompanied by the availability of full information required for any collaboration or decision making. It helps to build credibility with not only customers but also every stakeholder be it employees or society. We are fully transparent with our buyers and ensure that we share sustainability reports, internal audit reports, annual compliance progress status with our buyers on a timely basis,” – Archana Tomar Mann, VPCompliance, CSR, Training & Development, Orient Craft

“Being transparent is equivalent to being trustworthy; transparency implies openness, communication and accountability. Right from the beginning, our organisation has been genuinely transparent about the business practices that we follow. In our organisation even the last link of the value chain has solid trust in the company and its practices,” – Sunaina Khanna, Director, Methods Apparel Consultancy

 Comprehensive transparency

“Transparency should be a two-way street. If brands expect suppliers to be more open and accountable to elucidate their supply chain, so should the brands be especially in terms of their commitment levels to support such an environment,” – Tarun Bakshi, CEO, Triburg

“Suppliers have to be transparent with their clients, but they should similarly be transparent with their workers and staff. With regard to the workforce, there are many such issues where manufacturers have to be more transparent. Things should not only be in papers, but they also should be executed on the ground level and reflect clearly. The factory management should distribute an ‘Employee Handbook’ in local languages to all workers, which should contain all relevant HR information, policies, workplace rules, wages and benefits in detail. Why can’t apparel manufacturers have their workers’ records?” – VK Jha, Founder, Aider NGO

“Transparency and allied collective efforts are a state of mind and flow from top to bottom. If the leaders of the industry will take this forward, soon all will follow. Those who will not will be left out of the industry,” – Vivek Saxena, Director, Moissanite Apparels

Share This Article