The Indian Council of Leather Exports sent a delegation of Indian shoe producers to Brazil a few months ago, as it did in various European countries, to promote industrial collaboration between the two countries. India and Brazil are the second and third largest producers of shoes in the world, thanks in part to a large domestic market, but while the first one has seen its footwear exports increase lately, the second one has seen them stagnate.

Not surprisingly, one of the major joint venture deals being discussed at the moment in the Indian footwear sector is said to involve an unnamed Brazilian company. It sounds like an isolated case, but as indicated elsewhere in this issue, Brazilian producers have begun to tap into new foreign sources of production, notably China, to help offset the chronically high value of the Brazilian real and improve the competitiveness of their products in the USA and other markets.

Of all the potential low-cost sources of footwear production, India clearly looks like one of the most attractive options at the moment because of the broad availability of labor and local raw materials. It has started to appeal even to Chinese and Taiwanese investors at a time where the production of shoes in the Eastern part of China has reached a point of saturation. Several Chinese and Taiwanese shoe conglomerates have in fact started to invest in new production facilities in India, where they will certainly use their best engineers and technicians to train the local labor force.

Apache Footwear, a Taiwan-based company that makes shoes for Adidas, has already announced such a project. About 30,000 pairs of shoes per day will be churned out at its new factory, located 70 kilometers north of Chennai. It has been rumored that the company decided to move to India in reaction to the European Union’s anti-dumping duties against leather shoes from China and Vietnam.

About $73.8 million is being invested by Growth-Link Overseas, a Taiwanese subsidiary of Feng Tay Enterprise, to set up a factory in India’s southern state of Tamil Nadu to make Nike footwear. Growth-Link has been allocated a 275-acre site at the Cheyyar Industrial Complex, where it plans to be housed in a Special Economic Zone (SEZ) and be completely geared towards exports. The facility will have the capacity to produce 1 million pairs of shoes annually for the next five years. It will initially employ about 5,000 people when production begins next February. The project is being overseen by Cheyyar SEZ Developers Private Limited, an Indian subsidiary created specifically for the new development. This adds to Feng Tay’s production sites for Nike in China and Vietnam.

At the World Footwear Forum held in Spain last April, representatives of the Chinese shoe manufacturing industry insisted that it is unlikely to grow much in volume over the next few years. They said the industry is more keen on growing in quality and price. Recent moves by the Chinese government, such as the steady increase in the value of the yuan and the reduction from 14 to 9 percent in the sales tax refund for shoe exports indicate that there is no political will to push production rates further.

On the other hand, it seems that Chinese and Brazilian investments in India could help raise the quality and productivity of Indian shoe manufacturing. Brazilian officials recently remarked that some 2,000 experienced technicians from their country have apparently moved to China since 2005 to transmit their knowledge and skills to the local industry. They may do the same in India.