Its overseas procurement is mainly from Indonesia and China. According to Mr. Goenka, the link-up has been facilitated by the fact that, while domestic manufacturers in Japan are shifting out of terry towel and home textile manufacturing, Indonesia, the other active exporter, finds its domestics market more attractive as a result of a growing purchasing power within that country. This has forced Hayashi to look for a suitable Indian partner. The cost of premium Indian terry towels is in the range of Rs. 250-400 per kilo which is competitive compared to its Indonesian and Japanese competitors.
Indonesian companies compete in the middle range category of terry towels and home textiles.
China concentrates on the lower grade of home textiles. Welspun India has also entered into a joint venture with Zucchi of Italy for a Rs. 10 crore terry towel project. The plant, being set up for the manufacture of terry towels is expected to come up near Vapi, in Gujarat. The joint venture is in the process of getting the required approvals and awaits FIPB approval.