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NoBodyWantsToStartAbizInIndia-aug13

NoBodyWantsToStartAbizInIndia-aug13

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'Nobody wants to start an industry in India'
Last updated on: August 14, 2013 12:15 IST

New Hidesign store in Chandigarh.

“We are one of the very few emerging economies in the world with a current account
deficit. That is because nobody wants to start an industry in India. You can't get permissions, and once you get it, politicians interfere all the time,” says Dilip Kapur, Founder & President, Hidesign. Kapur started his business with just Rs 25,000 in 1978. Today, his leather business is an international brand worth more than Rs 150 crore (Rs 1.5 billion) with 84 exclusive showrooms (72 in India and 12 international) and a distribution network of over 2,000 stores in 23 countries. More than 1,500 people work for Hidesign. After doing his Masters in Economics and PhD in International Affairs from the prestigious Princeton University, Kapur started designing leather bags as a hobby and then turned his passion into a successful business enterprise. “Because we started off as rebels, we were able to create more innovative things. Whether it is in music, literature or even in business, rebels have innovated,” says Kapur. In an interview with Shobha Warrier at Hidesign’s Pondicherry factory, Dilip Kapur talks about the trials and tribulations of being a manufacturer in India, the current economic scenario and prospects for the Indian economy.

Also. You can't get permissions. politicians interfere all the time. it will not be attractive for services. But as India is such a huge country it does not necessarily mean we should be dragged down by the global economy. We should blame ourselves. Can you ignore manufacturing and rely only on services to grow? We are such a huge country so how can we go on living servicing other people? At this stage of our economy. But blaming the global economy for our economic problems is rubbish. This will remain a major issue. you don't need so many people to run the services except a few cases like the hotel industry. . Some economists say that India can be the services capital of the world. That is why I feel disappointed. That is because nobody wants to start an industry in India. How do you assess the current Indian and global economic situation? Today the global and Indian economy are connected. Many American companies have started doing back end work there itself. Our current account deficit is massive.Dilip Kapur. and once you get it. industry is very critical. As India becomes less competitive. We are one of the very few emerging economies in the world that has a current account deficit.

do not see a problem. Today. If a woman is single and earns Rs 30.Hidesign Store at Forum mall. you will see there is no recession in India. power and connectivity? As a manufacturer. Hidesign has only been growing. for people like us who deal directly with consumers. and you say. Do you call this recession time? (laughs) We hear that Indian consumers are crying about inflation. we have registered 39 period growth compared to the same period in 2012. Our growth at Shopper’s Stop is 69%. how have the last few years been for you? The consumer in India is full of optimism and confident of a better tomorrow. As an industrialist. Indian consumers are on a buying spree. she still aspires for a Rs 5000 bag! That is why I said the aspiration levels have changed. Ten years ago. How will you do services when you don't have good infrastructure like roads. I will give you the numbers and then. the upper middle class in India also buys our bags. In 2013. CEOs and foreigners living in India. . Bangalore Do you feel manufacturing has to be the backbone of an economy? I have nothing against services. Is it not because your target consumer is from the upper strata of society? Does not your growth reinforce the theory that the rich are getting richer and the poor getting poorer? Quite possible. Our consumers are only increasing. the aspiration levels of the upper middle class also are increasing. I don't see any of the ups and downs the nation experiences.000 a month. He is reluctant to shop. So. Also. our customers were actors. and not just the upper class.

we have started seeing growth in the UK market. our consumers are buying but there is no investment in India. and now. But it had had no effect on our company except in the UK. it was an investment boom. for the first time now. From when have you started seeing this change? In the last 5-6 years. The west has seen only good prospects after the World War 2 and they expected only growth every year. it was not a consumer boom. ..New Hidesign store in Chennai. consumers are feeling optimistic. India is our biggest market. we have started seeing major changes. Their expectations are coming down. The optimism with which they looked at the world has gone. more than double the size of the UK. you don't see in the West. But let me tell you. That was the time recession started globally. they are getting used to the idea of bad years. That is the difference between China and India. But here. Do you feel the global economy has started looking up? Yes. when China was booming. Now. The consumer binge you see in India. After the recession started. It is a different story in Asia for a producer like me. UK was our biggest market till 4-5 years ago. I feel people are getting used to the idea of lack of growth..

it is.Customers and employees are seen in a fake Apple store in Kunming. Where do you see India in the next 5 years? Recently. the Chinese have done wonders. will the industry look at India as the next place? They had serious doubts as it is not easy to run industries here. you can copy. The Economist asked. it will take 100 years for them to be at par with the US. which the Chinese are doing in a brilliant way. Do you feel China will soon topple the US to become the number one economy in the world? They will be the biggest economy with a huge population. Chinese economy is also slowing down while American economy is so rich with many innovative ideas. Yunnan province. Is innovation the key to growth? When you are wealthy. When you are poor. Their industries have done wonders. For the mass market. A Kashmiri woman walks under a garland made of rupee notes on display at a market in Srinagar. . As far as per capita income is concerned. when China becomes very expensive.

It is the small and medium ones that innovate and create employment opportunities and help the economy grow. India is growing.It is extremely complicated here because of lack of infrastructure. Despite all this. Have you seen any difference in red tapism post liberalisation? No. Harrison Marley and Jackson bags. I don't think there is a single department in the government that has been made redundant. Perhaps. it is much easier to break into the Asian market and our future lies here. That is because of the human power and its talent. . Which is the most attractive market for Hidesign? To build a brand. I don't see any difference. government regulations and red tape and labour problem. liberalisation made a difference to the Birlas and the Tatas but for the small and medium industries. I don't think there is any change. For a brand like ours. America or Germany. How tough has it been for you as a manufacturer? It has been very tough. That is where the heart of all economies lie whether it is in China. Ours is also a consumer-led economy and not investment-led economy. you need to find a way in Asia. We are so far behind that we can only grow. The government and the labour are two difficult parts of running an industry here.

To Asia. When oil price goes up. Many are suffering. Indian companies are not building brands. How do you see the performance of the Indian leather industry? Largely. it will jack up the inflation again in India. If you are dependant on the international economy. From the general perspective. it is an export oriented industry so it is not doing well because of the global recession. For the leather industry that produces for the western and European brands. price of every other commodity goes up. And. it doesn't matter to me and Hidesign. people and money to build brands. you are in trouble. . How much has the leather industry been affected by the fall in the rupee’s value? It helps me in my exports and hurts me in my imports! Overall. most importantly. If you don't build brands. You have to invest time. We are one of the rare brands. you are dependant on others. Oil price will go up. it matters a lot.Harrison Marley and Jackson bags. it is not the local market that matters as they supply to all the major international brands.

Did you ever find a contradiction in what you do now? You started off as a rebel. Yes. Wealth distribution is the government's job. . etc. Whether it is in music. there is a contradiction. anti-pollution. rebels have innovated. against the Vietnam war and now you sell your brand to the upper crust of the society. But I have kept my values intact. did not succeed. we were able to create more innovative things.Hidesign store in Bangalore. like antiracism. I would say you need both the creator and the distributor. What is the role of capitalists in a society? Wealth creation is the job of individuals and not the job of the government. Finally. But many of us who thought we could change the world. Look at Steve Jobs who was a hippie! Richard Branson was a hippie. literature or even in business. Because we started off as rebels. we joined the world.

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