The Hindu Business Line : India, China likely to cooperate in global leather market

INDIA and China, the two countries which are slugging it out in the international leather market, are now mulling cooperation in certain areas of common interests, including technology, training and tackling environmental and other global issues.

Industry experts feel that in case the process does take off, it could facilitate the two WTO members to take up jointly prickly issues such as non-tariff barriers at global fora.

Confirming the development, Mr S.S. Kumar, Chairman of the Council for Leather Exports (CLE), told Business Line that the process was triggered during his meeting with officials from China at the Asia Pacific Leather Fair in Hong Kong last month.

Meetings have been held with Ms Zhang Shu Hua, Vice-President and Mr Su Chaoying, Secretary General of the China Leather Industry Association. This is among the largest associations of its kind in China looking after the interest of the industry as well as the exporters, according to sources.

Amid the growing bonhomie between the two countries, efforts are also on to offer focus country status to each other on a reciprocal basis.

"While India has been offered a focus country status at the forthcoming All-India China Leather Exhibition and the China International Footwear Fair in September 2004, a move is afoot to give China a similar status on a reciprocal basis at the India International Leather Fair at Chennai in January 2005," sources said.

Currently, China has an $18-billion share in the total $94-billion world import of finished leather, leather goods and other items such as non-leather shoes. India accounts for about $2 billion. China's main area of strength is non-leather shoe exports - an item whose growth potential has already begun propelling India's exports. Between April and December 2003, India's exports of this item increased by 171.12 per cent, but still India is not conceived as any threat to China as yet.

Garment exports are another area of strength for China and exporters from that country score handsome gains, in major markets such as the US, through large volumes of exports made from items such as pigskins. These items are priced lower than the raw material used by Indian exporters who face competition on this front, in the international arena, since on religious grounds Indian exporters face problems using this raw material. The only area of straight competition is in leather goods and leather gloves.

However, sources felt that there was still plenty of scope for cooperation between the two countries. Corroborating this, Mr Kumar said: "Times are changing and the two countries could sit together and look at ways of supplementing each other in the international arena".

The areas of cooperation, which have been identified, are technology, training, environment and non-tariff barriers. Sources said that a substantial pool of Indians go to work in tanneries in China. Thus training inputs from that country at Indian institutes could fine tune the existing training programmes better, sources said.

In respect of technology, Indian companies could enter into supply agreements with Chinese companies which now source their needs for chemicals from countries such as Italy and Germany.

China is already a big importer of Indian finished leather. In the first three quarters of 2003-04, Hong Kong bought Indian finished leather worth $138.4 million accounting for the single largest share — 37.3 per cent — of India's total exports of this item. India is China's main source for cow hides and goat skins, sources said.

On environmental issues, the two countries could exchange information in areas such as implementation of technology for tackling tannery effluents.

However, it is tackling issues such as non-tariff barriers, that the most significant co-operation could take place, sources felt since both the countries were feeling the heat of these entry barriers.

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