Interview with Shivang N Desai & Saija Bhatt Thakker

Shivang N Desai (SND): We believe we fulfill the criteria of being a startup. There is an enormous market out there, we have an innovative idea, and yes we have a kick-ass team. There's a healthy start-up culture in the country. A start-up imparts credibility to the business, and people are responsive to a new idea when it is a start-up.

SND: We are involved in helping exporters of food, textile, chemicals and for some product categories we act as merchant traders, i.e. we get the products manufactured and sell them to end-users abroad and act as contract manufacturers. We are not into manufacturing but we do have ties with manufacturers. Based on the market and product research that we do, we give them a strict idea of the quality and quantity that needs to be maintained, the packaging, and delivery, and we also get the products made and export them. We have been in this business for the last eight years.

SBT: We are trying to shortlist products for textiles, and put together samples or brochures of these products. It is a part of the service package that we provide. Exporters abroad want to sell niche products in the Indian market. For example, baby products, mother-care products, baby diapers, fabrics, yarns; it all depends on the requirement, and there is no specific list.

Saija Bhatt Thakker (SBT) Currently,we are into food, but we plan to launch into textiles, in classical and technical textiles very soon, probably next month. We are in the research phase. We are in talks with the Southern Gujarat Chamber of Commerce & Industry (SGCCI) to help create awareness and help non-exporters in textiles to turn into exporters. This is not just limited to helping them fetch orders, but provide a corporate service where we can give them good revenues 3-5 years down the line.

SND: First, a majority of the people are very poor at data analysis. They are not aware of international payment and delivery systems; they fear that they will not receive payments for their shipments, and we want to bring clarity on this. Again, there is a certain lack of professionalism in small businesses in India. SBT: When we travel abroad one complaint that we receive is that we Indians are very convincing at the sampling stage, but when it comes to deliverables, both quality and quantity are not as promised. Another issue is the inability to balance the business in terms of domestic production and export, because to do this they need finance, infrastructure, good communication skills, and a travel plan. SND: In Surat there are agents for different stages-60,000 traders who deal in the complete textile value chain. The competition is also very stiff. The industry here is currently facing a problem of shutdown of almost 60 per cent of the grey fabric because of cheap imports from China. We want to put a message across that if China can come into our market and sell goods, which we are very well capable of making, why can't we do the same? SBT: Surat is the market leader of cotton polyester and nylon polyester fabrics. But China is producing at one-third of the manufacturing cost. The traders act as a bridge between manufacturers and retailers. The thriving force of the textile industry of Surat are the small and medium enterprises (SMEs). These manufacturers export through merchants, and also they themselves reach out to markets to export their products. Institutes like MANTRA have a good association with the government, providing vocational training for classical and technical textiles. They help micro, small and medium enterprises (MSMEs) to conduct research and training, and help them source information on the latest machines and technologies being used. They also provide the help of their lab and scientists to conduct research. The Global Fabric Resource and Research Centre (GFRRC) has a fabric library that has curated samples from over 30 countries. We want to bridge the gaps between all these and connect with the manufacturers. Finally, a critical issue is a lack of knowledge on how to provide proper quotations to the buyers for export. Manufacturers are unaware of the taxes and tax cuts. We want to help SMEs in this field too and encourage them to export.

SND: There is a high demand for textile machineries-both used and new-from European countries and China. The ratio of new and used is 70:30. In Surat, there are traders who have tie-ups with Chinese manufacturers who market through trade fairs and help you import machines and provide after-sale services.

SBT: Once the client is on board, we give them a chart of development and service delivery; after which we conduct product and market research. Then, we see the capacity of the manufacturer to deliver the products. Thereafter, we identify a strategy-do you want to sell in a place where there are Indian manufacturers selling, or in a completely new domain or market. We operate on the BOT format- build, operate and transform. We build their business from scratch, run complete business operations on their behalf and transfer the skills and knowledge for running a successful global business operation.

SBT: We did a soft launch and have put out advertisements in newspapers. The response has been very good, and we get 3-5 inquiries every day. When we go and speak to 10 people in the market, 9 of them want to export, but eight don't have the knowledge on how to go about it. Almost 90 per cent people do not know that while exporting there is a banking channel you need to go through even if you are trading with a known person, business partner or entity abroad. If you are channelling funds directly into your account, there is a provision that requires updating the Reserve Bank of India (RBI) at regular intervals under the Foreign Exchange Management Act (FEMA). These are the gaps we will plug.

SND: Currently, people are willing to export whatever products they have. Yarn is getting exported like nylon, polyester and other blends for making fabrics and upholstery. Globally also there are pockets that are moving into specialising in a particular category. For instance, Vietnam is into apparel export. There are a lot of international manufacturing processes that are coming into Vietnam from China since the labour is cost-effective. Bangladesh specialises in apparel as well, Turkey is into upholstery and carpets. Surat-based manufacturers of yarns and fibres export to Turkey. There is a huge potential for technical textile manufacturers to provide the base of carpets to Turkish buyers for carpet making. Opportunities there are aplenty.

SBT: Initial five months we spend in sampling and setting up base. But it takes at least a year to start getting returns. We involve manufacturers/ exporters to learn the process only after a period of time; we do not want them to be completely dependent on us.

SBT: We are looking at quality rather than serving quantity. We are looking at working with genuine clients. We are being extremely selective. We want to put together a team that serves and looks after the global requirement. We are doing end branding and sourcing. We want to create more exporters and exports. We understand markets. There are so many markets that remain unexplored. For example, the Dominican Republic has an FTA with the US. So, a company in India can open a unit there and export to other countries. A lot of people are worried about language, bank formalities, shipping formalities, their shipments returning, their money getting stuck, and this is where we step in.

SBT: We have done a lot of digitalisation, but we haven't digitalised the public. You need a digital signature to get an Import Export Code (IEC) which is a license to export or import. But manufacturers are unaware and easy access to such information needs to be provided. Logistics must be made easier-the number of forms and documentation complicates the process. We need single form formats. An exporter needs to educate himself or needs to take help of custom house agents (CHAs), who deal with all the paper work concerned with logistics. The procedure for a letter of credit (LoC) is also very tedious. The government is putting in a lot of effort; there will be a lot of new things coming up in the next five years like inland waterway transports. So, we are at a very nascent stage where exports need to be developed. But slowly, things are happening; the government is getting into simplifying trade rather than creating barriers. We connect the whole value chain. Most manufacturers are traders, they sell to merchant exporters, and hence manufacturers do not get any benefit and actual returns. After three years, we would want exporters to come up with new products and build them. We have 7-8 clients and 17-18 prospective clients. We work with a lot of certification agencies and collaborations with different CHAs. The main idea is to create critical components of an export house and export cycle that is product development, market development, research, financial knowhow, creating an identity and hand-holding the client, which is a big aspect for successful export and get recurring orders. We have 10 people in India and few of them in the US.