Economy

Leather industry faces rising costs, material short supply

| Updated on: Jan 28, 2011

Leather industry has to gear up for several challenges including increasing costs and raw material shortage in the coming year, according to Mr M. Rafeeque Ahmed, Chairman, Council for Leather Exports.

The industry can look forward to a positive year after two continuous years of slow down as demand in the international markets has picked up.

But simultaneously, it has to address raw material shortage as hides and skins supply in international markets will be hit with floods affecting Brazil, Australia and Pakistan.

Costs are also on the increase, and with exporters concentrated in South India, the region would be particularly hit as it faces more stringent environmental norms that add to the cost.

The industry in South India is meeting Zero Liquid Discharge norms but has to factor in the cost.

Antidumping duty

Addressing the 45th edition of Lerig (Leather Research Industry Get-Together) organised, an annual event organised by the Central Leather Research Institute and the industry, he said competition is expected to intensify in the international markets as the EU is set to lift the antidumping duty of 10-15 per cent levied on exporters in China and Vietnam. This would give exporters there a cost advantage and impact plans of international brands which were to expand capacities in India. But expansion here is inevitable as India has proven capabilities.

As a part of its budget expectations, CLE has sought Government support to set up mega leather industry clusters in Tamil Nadu, Andhra Pradesh, West Bengal and Uttar Pradesh. These would give the much needed infrastructure support and space needed for the industry.

Eyeing African assets

Dr K.V. Raghavan, Chairman, Research Council, CLRI, said the Indian leather industry should focus on Africa as a supplier of raw material and business partner. CLRI has ongoing technical assistance initiatives in Ethiopia and is set to assist the industry in Sudan and South Africa. This is a trend that the industry can exploit. CLRI will catalyse industry collaboration, he said.

Published on January 29, 2011

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