The post-Brexit volatility of the Pound, and the impact on the euro, are the immediate concerns for the domestic leather sector. India is among the largest leather exporters to the EU and the UK, the largest market in the Union.
The long-term clarity will take about two years to emerge, as negotiations take place on the terms under which the UK will wean itself away from the EU, said industry representatives. The UK accounts for about 12 per cent of India’s $5,854 million in leather and leather product exports, according to official statistics.
Rafeeque Ahmed, Chairman, Council for Leather Exports, pointed out that the British currency has depreciated over 8 per cent. Leather and leather goods export prices will have to be hiked proportionately to offset the devaluation.
“But can the UK consumers absorb this hike in the backdrop of the shaky market conditions,” he wondered.
Habib Hussain, Chairman, Leather Sector Skill Council, said export prices will be impacted as the Pound takes a hit and the euro is impacted.
“Currency is the immediate worry,” he said.
Export units in North and East India, which cater primarily to the UK, could be relatively more impacted compared with those in the South, which cater to Italy and Germany.