Hong Fu Industrial Group—a Taiwan-based footwear manufacturer whose clients include Nike, Puma, Converse and Vans—will invest 10 billion rupees, roughly $131 million, in building a new footwear unit in southern India.
Tamil Nadu’s chief minister M. K. Stalin tweeted Thursday that the arrangement—Hong Fu signed a “memorandum of understanding”—will bring 20,000 jobs to the Indian state. Hong Fu was reportedly still selecting a location for its planned Tamil Nadu unit when the news broke Thursday. Last week, The Times of India reported that the manufacturer had already visited four sites in North Tamil Nadu and planned to select the site Sunday.
According to industry estimates, India’s footwear market is expected to reach $15.5 billion this year and to grow at an estimated 15 percent annual rate through 2030. In 2021, the country imported 29.64 million pairs to the U.S., a 57.2 percent increase from the prior year and a 7.4 percent bump from 2019, according to the Commerce Department’s Office of Textiles & Apparel (OTEXA). In the first two months of the year, imports were up 65 percent to 6.25 million pairs.
Among the brands moving manufacturing to the country is the clog maker Crocs. After last year’s supply disruptions in Vietnam—the Southeast nation was originally set to source 70 percent of its product in 2021—the company’s executives signaled that they were looking to diversify Crocs’ manufacturing base. Though CEO Andrew Rees told investors in October Indonesia was the “most immediate target,” he also revealed plans for a “major facility” in India.
Potentially hindering the country’s footwear growth is a Jan. 1 tax hike that raised the tax on shoes under 1,000 rupees, roughly $13, from 5 percent to 12 percent. Footwear manufacturers and traders in Agra, who decried the hike as a threat to their businesses, protested the increase in January by shutting their shops.
At the time, Rajiv Wasan, general secretary of the Agra Footwear Manufacturers & Exporters Chamber (AFMEC) told Sourcing Journal that the tax hike would hobble the industry, threatening a “major chunk” of the business. “Manufacturers will be pressured for underbilling, even though there will be an input tax credit,” he said. In effect, he contended, the government stands to lose revenue as businesses will be more likely to revert to certain ways of recorded billing.