The Hindu Business Line : `New marketing window' opens for leather industry

The latest definitive anti-dumping duty imposed by the EU against China and Vietnam on leather footwear has opened up a "new marketing window" for the domestic leather industry to make a bid to capture a chunk of the EU market with millions of consumers in as many as 25 countries.

Sources in the Government told Business Line here that on October 5 the EU had slapped a definitive anti-dumping duty on imports of certain footwear with leather uppers from China and Vietnam at 16.5 per cent and 10 per cent, respectively.

With a production of 2 billion sq. ft and exports of $2.6 billion worth of leather wares in 2005-06, the Indian leather industry has seldom had it so good as it is now with the new opportunities opening up in the EU market as also in the US.

Action Plan

According to the Council for Leather Exports (CLE) global trade in leather products rose from $77.33 billion (2000) to $97.60 billion in 2004, while India's trade in such products increased from $1.99 billion to $2.38 billion during the same period. But India's share, which was 2.54 per cent in 2002 declined to 2.44 per cent in 2004. China and Italy remain on top with a share of 22 per cent and 16 per cent worldwide.

When contacted about this development, the Minister of State for Commerce, Mr Jairam Ramesh, told Business Line here that he has had one round of discussions with the officials of the CLE. He is scheduled to meet them in Chennai soon to identify an action plan in order to cash in on the recent developments abroad.

Non-leather Footwear

He said Taiwanese companies have shown keen interest in investing in the industry in Andhra Pradesh and Tamil Nadu (Sriperumpudur) and the focus would be on diversifying from high-end product in the price band of $15-$20 per pair to low-priced leather products in the range of $5 to $9 per pair to give a run to the low-cost suppliers like China and Vietnam in these markets.

"We must switch over to volumes rather than persisting in the high price segments," he added.

Mr Ramesh further contended that while global market has sizeable non-leather footwear, Indian production is mainly leather and hence there is a need for pushing production of non-leather footwear to earn a modest share in the global market. He said investment, both domestic and foreign, in Indian leather industry is important for both export and employment generation.

This is important now because the CLE has conceded that the Chinese were able to produce leather garments at competitive rates and entered the US market in a big way pushing down the Indian sales. High raw material cost appears to have hit the garment industry besides the deficiencies in design capabilities and low productivity.

The sources further said footwear sector would lead the growth for about five to six years and hit a plateau unless the product-mix is altered to suit the needs of the US market. It is in this context experts have cautioned that investments in the sector would not increase unless SEZ parks are offered to the investors.

The proposed capacity augmentation is possible through five SEZ parks for the leather products at Chennai, Kanpur, Kolkata, Agra and TADA (Andhra Pradesh). Similarly, for the tanning sector, it is proposed to have two exclusive tanning clusters — one near Nellore in Andhra Pradesh and one near Ennore in north Chennai, the sources added.

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