Consumer goods makers spread 'Made in India' label

Coming soon to the toiletries aisle in supermarkets around the world: the Made in India label.
Multinational consumer goods makers are souring more goods from India for their overseas markets, cashing in on new tax incentives and cheaper labour and production costs, which can be one-third of those in developed countries.
The trend started with raw materials, but global giants such as Unlived Plc, Gillette Co and Nestle have added soap, toothpaste and personal care products as well as traditional fare such as packaged tea and coffee.
"India is clearly competitive, and has emerged as a big market for all consumer goods players," said Nikhil Vera, a senior vice president of research at SSKI Securities. "Companies are adding capacity, leveraging skills of the parent company and getting more integrated and will step up souring from here."
Exports from Unilever's Hindustan Lever Ltd (HLL), India's top consumer goods maker, were 12.5 billion rupees ($270 million) in 2003, or 12 percent of net sales. "HLL has developed economies of scale in some categories over the last seven decades and can now leverage the large production base here," a spokesman said.
"Companies have developed global competitiveness in cost and quality. We have set up manufacturing facilities at one-fourth to one-third of the costs (of) developed countries," he added.
But sceptics maintain that potential is limited to categories where India has a natural advantage, and that exports have not grown as quickly as anticipated. HLL's exports of soap, tea, skin care and oral care products grew just 2 percent in 2003 from a year.
There is greater potential in raw materials for detergents, soaps and shampoos, whose exports could quintuple to $500 million in a few years, said Anna Shah, analyst at ICICI Securities.
Procter & Gamble exported raw materials worth 1 billion rupees last year, roughly the same as 2002.
Gillette India's exports of toothbrushes, razors and Braun appliances so far this year are $1.6 million, compared with $3.2 million for 2003, and Colgate India may soon become a base for the toothpaste maker's global operations.
Until the mid-1990s, when liberalisation opened up the economy, soaps, shampoos and personal products were shabbily packaged and offered little choice to Indian consumers.
With greater competition and the modernisation of the retail trade, firms now compete to offer a choice of slick products more like those found in developed markets.
India also recently began giving tax incentives to firms setting up manufacturing plants in underdeveloped regions such as Jamie, Himachal Pradesh and Uttaranchal. HLL, P&G, Colgate and others have jumped at the offer.
Colgate plans to spend 500 million rupees developing a unit in Uttaranchal, while Nestle India, whose exports of coffee and tea totalled 2.6 billion rupees last year, up from 2.4 billion a year, is to spend 1 billion rupees on an infant milk plant.
P&G India sold nearly 300 million rupees worth of Indian-made Vicks Vapours in Asia last year. HLL exports around the world and is a part of Unilever's seafood supply chain for Europe.