India’s homegrown sports goods manufacturers have emerged as key competitors in the global market for sports goods, with nearly 60 percent of the output of the industry in India being exported. In the recent years, Indian companies have also succeeded in supplying sports goods to international sports events such as the Asian Games 2018. However, several of India’s Asian peers such as China, Vietnam, Thailand and Pakistan are putting up fierce competition and have outshined India in the global market for certain sports goods.

India’s lost ground in football exports is a case in point. Football was the 2 nd largest sports good exported from India in 2010-11, with a share of 12% in India’s total exports of sports goods during the year. However, the share of football in India’s exports of sports goods plummeted steeply to 3.7% in 2019-20. Concomitantly, India’s share in global exports of inflatable balls also declined from 2.4% in 2010 to 1.5% in 2019.

The decline in Indian football exports is primarily due to rising global demand for machine-stitched footballs, while India’s football production largely remains handstitched. While the global market for handstitched footballs stands at around 45-50 million units per year, the mechanized varieties sell at least twice as many. Consequently, countries like Pakistan and Vietnam, that have successfully transitioned into mechanized production of football have emerged as key competitors for India in the export market in the recent years. Pakistan has in fact emerged as a top supplier to major football events, including FIFA events and Olympics. The Adidas Albert of the Olympics 2012 and Adidas Telstar 18 of the FIFA World Cup 2018 were both sourced from Pakistan.

For India to regain the lost market share across sports goods, mechanization of the production process would be critical. This would, however, require substantial investment in machinery. As most firms in sports goods clusters are MSMEs with limited capacity for such investments, the Government may consider providing capital subsidy to companies for promoting mechanisation. State-of-the-art common infrastructure facilities also need to be developed in more sports goods clusters across the country.

Alongside mechanisation, the standardization and certification of sports goods in India would also be critical. Sports goods exporters need to conform with various standards before exporting to the developed markets. However, obtaining these certifications entail huge costs, which are often prohibitive for the MSMEs operating in the industry.

For instance, FIFA has its own FIFA Quality concept for footballs. FIFA’s Quality and Quality Pro certifications that allow companies to target top level leagues involve fees in the range of Rs. 2.6 lakhs to Rs. 3.5 lakhs— for a certification valid for 4 years. A commercial agreement with the FIFA for both Quality and Quality Pro certifications also requires a minimum guarantee of nearly Rs. 16.2 lakhs for a 4 year period, and are subject to royalties per ball sold of Rs. 60 and Rs. 120, respectively. Owing to the huge costs involved, many small players are often unable to get these certifications. To improve market access for sports goods exports, the Government could consider providing a refund of expenses incurred on obtaining quality certifications, to the extent of 50% of expenses incurred by exporters, subject to a ceiling per exporting unit. This will reduce the financial burden and improve competitiveness of sports goods exports from India. There is also a need for diversification of sports goods exports from the country. Indian companies are currently focusing on traditional areas of competence, which are trite goods (such as balls) fetching low values in the international market. A gradual diversification towards high value, equipment intensive goods (such as golf equipment) would allow firms to move higher up in the value chain, face less competition from low-cost suppliers, and fetch higher margins. This would entail greater engagement in product and process innovation and investments in R&D. Currently, even the larger companies in the industry make significantly lower R&D investments, to the tune of only about 0.01% of their turnover. Given the nature of the industry, companies alone would not be able to undertake investments in R&D, and a more collaborative approach to innovation is required in the sector, encompassing all stakeholders, including the Government, research institutions, and the companies.

There is substantial scope for further development of the domestic industry on account of the large and growing market for sports goods. As per India Exim Bank estimates, the sports goods industry has an untapped export potential of US$ 227.4 million, which if realized, could help exports from the sector reach the US$ 500 million mark. Given the Government of India’s overall focus on building a robust manufacturing sector, the time is ripe for India to push for appropriate incentive structure to address the challenges in the sports goods sector, enhance domestic capabilities and improve export competitiveness.

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