Between April and September, exports of leather products from India grew by 18.2 percent to $2 billion. In local currencies this translated to an increase of 23.5 percent. While all leather products saw increases, the growth rate fell slightly for footwear and saddlery. However, exports of the same products fell significantly in October, dropping by 10 percent compared with October 2007. Export orders are down by 63 percent.
Employment in the leather industry is expected to fall by between 10 and 30 percent as demand drops in the European Union, the USA and Hong Kong, the country’s main destinations for leather exports, as well as Japan. An increase in the prices of raw materials has hindered leather manufacturers as well.
Though the country has cut excise duties by 4 percent and is planning a cash infusion to boost the economy, it is still forecast that manufacturers in sectors including leather plan will cut production by 10-50 percent between November and March – which would even further slow the growth of the manufacturing sector.
While the drop may only be temporary, the figures may deal a fatal blow to the Indian leather industry’s plans to double its exports by 2010-11 from the level of US$3.48 million reached in the 12 months ended last March. Germany was the largest destination, absorbing 14.05 percent of the total, followed by Italy with 13.78 percent and the U.K. with 11.91 percent.
At the Global Shoes show in Düsseldorf last September, where 21 Indian companies participated, officials of the Indian Council for Leather Exports admitted that the target may have to be shifted by at least one year, but the picture as deteriorated since.
As the second-largest producer of shoes in the world, the country produced last year a total of 1,009 million pairs. Out of those, 368 million pairs were finished leather shoes, of which 115 million were sent to foreign markets. Another 100 million pairs of upper were manufactured. The production of women’s shoes has been rising and now represents 34 percent of the total volume. The total installed capacity is given as 900 million pairs for leather shoes and uppers.
Indian producers of shoes and components have been negotiating joint venture schemes with various European companies, taking advantage of numerous incentives for investment. They hope to resist to the global economic crisis by selling more domestically. Leather products valued at $3.52 billion were sold domestically last year, just above the export score.
As India’s economy grows, its population is shopping more and more. Consumer goods and services worth $360 billion were sold in India last year, and the level is expected by economists to reach nearly $500 billion in 2010. Middle-class Indians, who number about 300 million, are likely to see wage increases of 15 percent per year in the next few years, with an economy expanding at about 8 percent annually.