Reebok India have sought the Indian Government’s permission to import branded footwear products from their overseas manufacturers and undertake retail trading through their distributors. The move comes in the wake of an ongoing disagreement with their Indian financial partner, Phoenix Overseas, over a change in the share holding of the joint venture.
For the past year, Reebok have either been outsourcing shoes from Punjab-based manufacturers or importing from neighbouring markets such as China. Reebok’s imported products account for 30% of their sales volume in India. Reebok sources claimed that imports were working out cheaper than domestic outsourcing. While labour in India is cheap, most inputs are increasing due to constant changes in design and improving quality. Phoenix have cited this as one of the reasons for ending the outsourcing pact.
In their application to the government’s Foreign Investment Promotion Board, Reebok have said that they would not undertake direct retail trading – barred under law – but instead import products, stack them in warehouses, and then sell them directly to distributors/dealers who will then retail the products. This will allow the company to bring in a larger range of products which local manufacturers are unable to deliver.
