Outsourcing: UK luxury co under fire for underpaying Indians

London: British designer handbag manufacturer, Modalu, has come under fire for outsourcing work to an Indian firm that pays extremely low wages to some of its workers.

The Hampshire-based firm is best known for designer handbags sported by British celebrities such as Pippa Middleton, Prince William's sister-in-law.

The Daily Mail now claims these bags with a price tag of around 195 pounds in the UK are being manufactured by a firm in India where workers are paid as little as 17 p an hour, or Rs 121.9 (1.39 pounds) for an eight-hour shift.

[caption id="attachment_595610" align="alignleft" width="380"] Modalu is owned by TLG Brands, which has outsourced production to two facilities in Tamil Nadu, the hub of India's leather industry. AFP[/caption]

Modalu is owned by TLG Brands, which has outsourced production to two facilities in Tamil Nadu, the hub of India's leather industry. Its tannery in India, which is located in an industrial estate in Chennai, employs mostly dalit workers, according to the newspaper report.

The factory, described as clean and not running under "sweatshop" conditions, had higher paid workers who could earn Rs 30,000 to Rs 35,000 a month (350-405 pounds), while skilled cutters could earn Rs 20,000 a month (231 pounds).

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According to a study last year by the Asian Floor Wage Alliance, the minimum living wage, or the amount needed to live a basic existence in India, was calculated as Rs 12,096 rupees a month, or 138 pounds. Modalu claims the difficulty in finding a factory which had the capacity to meet its demand limited the company's options in terms of outsourcing to India.

"We hope to have some manufacturing in the UK by the end of 2013. I don't know the exact labour costs, but we do carry out independent factory audits," chief executive Mike Hiscock said.

PTI