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Vocal for local: How can the PM’s push play out for Indian brands?

Prime Minister Narendra Modi has given a clarion call to the nation to support local brands. But where do home-grown companies stand when it comes to global competition? BestMediaInfo.com analyses

In recent years, the closest any Indian brand came to threatening global giants in the overly competitive domestic market was three years ago when the Baba Ramdev-led Patanjali Industries shook the corporate world.

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In the summer of 2017, Patanjali had announced its results for FY17 and surprised analysts by clocking Rs 10,000-crore revenue. Around the same time, the company's leadership gave statements that they'd soon surpass the likes of HUL. However, that wasn't to be, because inconsistent product quality and overambitious business plans led to the brand faltering. Patanjali's mission was, too, led by 'buy Indian' sentiments. The consumer did respond initially but quality and credibility of the brand both came under question after a while.

If one were to compare Indian brands in the FMCG sector, Marico and Dabur hover between Rs 7,000 crore and Rs 8,500 crore in revenue terms. In comparison, HUL has revenue of more than Rs 34,000 crore in India. In electronics, across segments, there's hardly any Indian player with a substantial share.

Prime Minister Narendra Modi has asked Indian consumers to support local brands. But do Indian brands have it in them to dethrone international competition? Experts say despite the PM's call, India will remain an open market and home-grown brands are not going to get any preferential treatment from the government. They have to win the consumer on the back of quality, innovation, pricing and a right marketing mix.

After PM’s call, the ruling Bharatiya Janata Party came out with a clarification on what going ‘vocal for local’ means.

The party has said that local does not only mean products made by Indian companies, but also those manufactured in India by multinational companies or MNCs. The party stated that it would not make any distinction among them.

BJP spokesperson and Rajya Sabha MP, GVL Narasimha Rao further made it clear that the party will not issue any directive to purchase local products. However, he added, many people might themselves start buying good quality products made in India.

"When we say local, it is not just local products made by domestic companies. Anything that is manufactured in India for us is local.

"Anything made locally, we won't make a distinction; there is not going to be any directive, you buy this or buy that, there is no directive. This will all be individual decisions," Rao told news agency PTI.

Will there be an eventual rise for home-grown brands?

The sectors where Indian brands have a strong positioning are dairy, herbal consumer brands and a few categories of snacking.

B K Rao

"The statement of PM suggesting citizens to spend on home-grown products will make a fantastic business journey for many local brands, says, B K Rao, Sr Category Head, Marketing, Parle Products.

According to experts, Indian brands in FMCG, health and wellness, home and living categories will benefit as these categories have well produced and mature products.

Rajendra Agarwal

For global brands, there is an imminent fear of decreased levels of imports and a complete shift of consumer brand affinity, says Rajendra Agarwal, Managing Director, Donear Industries.

"I believe this call intends to boost employment and inculcate prowess in everything we do. As long as manufacturing units continue to produce for and boost local opportunity and use the Make In India tag, I don't believe that this niche will be affected," he said.

Rao said the sales of home-grown brands could see a jump in the coming months and the preference for international brands will go down by 15%.

"In the next three months, home-grown brands will have a positive impact with an increase of 18-20%.  In the long term, it will slightly reduce to 10-12%," Rao said.

Zaheer Merchant

This initiative will provide an impetus for us to manufacture, source and distribute more Indian products in every category we are present in, said Zaheer Merchant, Director, Corporate Affairs at QNet.

The idea behind the statement of "Vocal for Local" and "Be Indian Buy Indian" is to increase to push Indian brands to become large and have hero products.

"The knock-on effect will encourage foreign players to move more manufacturing to India, and the spinoff is huge at every level," said Merchant.

While the expectation of growth and preference for smaller, localised brands is more, it does not mean that consumer usage habits will completely change. More and more consumers today prefer options and the freedom to use various types of products.

RS Sodhi

RS Sodhi, MD, GCMMF (Amul), said global brands will struggle as most consumers are aware of their origin. The call to purchase Indian products by the government and Indian brands will bring in a change, though it might take a long time, Sodhi said.

The economically weaker sections mostly prefer essential home-grown products because of the price margins compared to multinational brand products. "We will now see the impact on the educated and millennial classes too," Rao said.

Ajoy Chawla

"Everything post-pandemic will be a new normal. As India rebuilds to the new normal, we, as India's national, local jeweller will be happy to play a small yet significant part in its bounce back," said Ajoy Chawla, CEO Jewellery Division, Titan India.

Manish Chowdhary

The call means better business and the companies should gear up for meeting the demand by upscaling their manufacturing capabilities, customer care and consumer connect strategies, said Manish Chowdhary, Co-Founder of Wow Skin Science.

"While global brands have been in focus for a long time here, we now see the consumer consciousness moving towards Indian brands and India-made goods. It will help lift the depressive mood of the Indian players that is prevalent currently," he said.

High-value categories lack domestic competition

In categories such as electronics, luxury products among others, competition from Indian brands is minuscule.

"When I joined the industry 38 years ago, 80% consumers used to prefer multinational brands and then they shifted to national brands. Now I am seeing them changing their preference to local brands,” says Sodhi. He said the affinity of Indian brands in the FMCG category is increasing but the automobile and electronics sectors have to wait.

Experts said as far as luxury brands are concerned, there will not be any impact of global over Indian or vice-versa as consumers buy such products as a status symbol. They will not buy Indian over global unless they meet excellent quality standards.

"Luxury products will not see much impact of 'buy Indian' as there are not many Indian brands and products in this space. However, the requirement is to create more and more strong brands across each segment. It is time for Indian brands to strengthen their product segment and quality," Sodhi said.

According to Merchant, in the new ordinary or in the post-pandemic world, luxury brands will have to work hard to retain their allure. Local brands have to maintain a competitive edge, without compromising quality.

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