Indian leather industry feels heat of global meltdown

December 22nd, 2008 - 12:56 pm ICT by IANS  

Kolkata, Dec 22 (IANS) The Indian leather industry is shrinking due to the global economic meltdown. Leading players fear a 25-30 percent drop in exports and job losses in the long run.”As footfall in global stores like Wal-Mart, Marks and Spencer have declined, it is impacting sales badly and in turn export is suffering,” S.S. Kumar, chairman of the city-based Government College of Engineering and Leather Technology, told IANS.

In the four weeks of December and the first two weeks of January, all these stores experience around 30-35 percent of the total yearly footfall. This year the footfall has been far short till the third week of December, Kumar added.

European countries are the biggest importers of Indian leather goods, followed by the US and Australia.

“There were quite a few export cancellations in the recent past from the US and the UK,” Kumar said.

India’s export of leather goods touched $3.47 billion in 2007-08. The target for the current fiscal is $4 billion. That, experts feel, is unlikely.

“We are trying hard to keep the export volume up to last year’s level at least,” Kumar said.

India exports a host of niche leather goods - garments, bags, footwear, gloves and, saddlery and harness.

Ever since the global meltdown began, the Indian leather garment sector has been “very badly affected”, said Kumar.

Moti Lal Sethi, convenor (leather apparel) of the Council of Leather Export (CLE), told IANS from New Delhi: “There is cancellation of orders mostly for luxury leather goods.”

CLE is an autonomous non-profit body looking after export promotion and development of the Indian leather industry.

Stating that the market was extremely sluggish now, Sethi said in the first six months (April-September) of the current fiscal, Indian leather industry saw a 22 percent growth. But since October the market condition has deteriorated.

The international demand for leather products is shifting from luxury goods to necessary goods.

“It is important for Indian manufacturers to strike a balance between quality and quantity to cater to the present need,” Sethi said.

Indian producers need to gear up to manufacture goods at competitive prices, he added.

He indicated that if the present trend continued, it may hurt the labour strength of the industry.

“It is a very labour-intensive industry. The organised sector employs around 2.5 million people,” Sethi said.

Added Mani Almal, managing director of APL Polyfab Pvt Ltd, which manufactures footwear components and gives it to exporters: “We have not experienced any order cancellation yet, but clients are asking for delay in shipments and extension of credit lines.”

The business scenario in leather industry till November was not affected as the order books were filled, he said.

“It will definitely be affected in the coming months and we think there will be almost no orders after January.”

Sethi said the industry was hopeful that something better would happen in the future. It was talking with the government on duty drawbacks, licensing, import and marketing polices as well as loans and credit.

However, there is a silver lining. Importers who used to ship leather goods from China earlier are now shifting focus to India as Indian leather goods are cheaper.

Last fiscal, leather garments worth Rs.18 billion (Rs.1,800 crore) were exported from India. This year till September, the garment section clocked an export growth of 30 percent.

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