Financial Daily from THE HINDU group of publications
Saturday, Nov 13, 2004
Exports & Imports
Industry & Economy - Leather
India emerging as leather hub as export orders swell
New Delhi , Nov. 12
INDIA, along with China, is emerging as the leather production and tanning hub for the $85-billion (around Rs 3,83,690 crore) world leather industry.
With over 10 per cent of the raw material base of hides and skins, India is clearly becoming a dominant player in the world leather market as the producer of high quality leather footwear and garments and, more recently, as a processing and design hub for leather goods.
According to industry players, several European manufacturers have shut down manufacturing in their geographies due to the overall cost implications and stricter environmental norms, and are now shifting base to either India or China. Others, who have not yet shifted shop, are now sourcing processed raw material from here.
Several large European retailers, including Clarks, Next and Hush Puppies are among those procuring products from India in a big way, while a number of US retailers, including Wal-Mart and JC Penny, are increasingly looking to tap the Indian supplier base.
China, with exports over $10 billion (around Rs 45,140 crore), leads the world leather trade, while India, with exports of about $2 billion (around Rs 9,028 crore) last year, comes second.
"India's position in the world leather business has undergone a major transition during the last couple of years. Till a few years back, Indian manufacturers were sending the raw material to European countries for value addition. Now for high-end leather products, the hides are sourced from Europe, processed and made into finished products here and then exported back to Europe," Director (Finance) of Mirza Tanners Ltd, Mr Kuruvilla Kuriakose, said.
With the tanning and processing hub shifting to India, domestic leather industry is on a high and order books are swelling. For instance, the Rs 100-crore Forward Shoes has signed an agreement to manufacture shoes for Start Rite, a UK-based children's footwear major.
"Indian suppliers have carved out a niche for themselves into the mid-segment market, while China is catering to the low-end mass market. The margins are significantly higher for Indian suppliers due to higher marked-up prices," a leather exporter said. Also, Indian suppliers have a presence in the market for men's, ladies and children footwear, as against suppliers from China and East Europe, who specialise in only a particular segment, he said.
Recent policy measures taken by the Government to unleash the potential of the sector is also playing a major part in the resurgence of the domestic leather industry, a leading exporter said.
The Government has cleared a leather upgradation fund as part of a Rs 400-crore development package for the industry.
Besides earmarking an outlay of Rs 290 crore for modernisation of the industry, the package envisages an outlay of Rs 110 crore for setting up five leather parks two in Chennai and one each in Nellore, Agra and Kolkata.
Under the leather park package, Chennai is going to have two parks one for footwear and the other for components.
An exclusive park for tanneries is also coming up at Nellore, a leather goods park within the upcoming Calcutta Leather Complex in Kolkata and another component park in Agra.
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