At the India International Leather Fair (IILF) held in Chennai a few weeks ago, the Indian Council for Leather Exports (CLE) announced plans for the establishment of six new mega leather clusters in various parts of the country by 2017, along with the related infrastructures, to support higher levels of production for the domestic and export markets.

A new Leather Sector Estate Council has been created to attract employees to the production areas. As the leather sector is facing an acute shortage of manpower, particularly for the performance of shop floor operations, a Leather Sector Skill Council has been set up to train about 2 million people over the next 10 years. 

In order to enhance cooperation and trade among the leather industries of the South Asian region, a new Leather Industries Association of South Asia, LIASA, was recently set up among India, Pakistan, Bangladesh and Sri Lanka, with a provision to also include Nepal and Afghanistan later on. 

At the fair, the CLE gave an update on the development of the Indian leather industry. A total of 439 companies exhibited at the 28th edition of the IILF, including 159 companies arriving from abroad. Visitors came to the fair from 32 different countries. 

The Indian leather industry has registered consistent growth in exports over the past few years. While total exports of leather and leather products reached the equivalent of US$3.5 billion in the 2007-08 business year, they were up to US$4.9 billion in the 2011-12 business year, which ran from April 2011 to April 2012. The figures for the latest business year were almost 23 percent higher than those recorded in 2010-11, marking one of the highest growth rates of the last 10 years.

The CLE expects only marginal growth during the current business year, which runs through next month. The first six months of 2012 were very difficult, but India's leather exports went up again in the last three to four months.

The government of India has set an ambitious export target of US$14 billion for the leather sector by the end of its 12th five-year plan, running until the end of the 2016-17 business year. The leather industry in India employs about 2.5 million people, mostly from the weaker sections of society. Women account for 30 percent of all employees in the industry.

Footwear accounted for 42.6 percent of India's total exports of leather products in 2011-12. Men's shoes accounted for 54 percent of all footwear exports, women's footwear 37 percent and children's shoes 9 percent. The total value of footwear exports reached US$2.1 billion in 2011-12, up from US $1.8 billion in the previous business year. Footwear exports are expected to increase to US$7.1 at the end of the 12th five-year plan. 

Leather shoes accounted for 35.23 percent of all leather exports in 2011-12, while the share taken up by footwear components went down to 5.79 percent. The European Union took in 64.01 percent of India's leather exports with a total value of US$3.1 billion in 2011-12. The U.S. was the second biggest importer of leather goods from India, accounting for 9 percent of the total, followed by Hong Kong with 7.38 percent, the United Arab Emirates with 2.24 percent, Australia with 1.39 percent and Africa with 0.85 percent.

The major European markets for India's export of Indian leather products in 2011-12 were Germany with a share of 15 percent, followed by the U.K. with 11.15 percent, Italy with 10.9 percent, France with 6.25 percent, Spain with 6.08 percent, the Netherlands with 4 percent and Belgium with 2.32 percent.

Meanwhile, Indian shoe producers are trying to develop their operations beyond the manufacturing stage. In order to support the development of Indian brands, the CLE is asking its members to invest 2 percent of their profit in brand-building processes.

Usually, Indian manufacturers follow the design ideas handed over by their foreign clients. Some manufacturers have recently started to show their own designs to foreign brands. The Indian Shoe Federation expects that Indian manufacturers will soon design about 20 percent of shoes sold outside India. 

The development of these skills goes hand in hand with the ongoing development of the domestic shoe market. According to a study conducted by the Associated Chambers of Commerce and Industry of India, Assocham, the average per capita consumption of shoes increased from 1.7 pairs in 2011 to 2.5 pairs during the current business year 2012-13, and the average value is going up, too. The Indian Shoe Federation sees the average per capita consumption of shoes increasing to 3 pairs by the end of the 2013-14 business year. A decade ago, the annual per capita consumption of footwear in the country stood at only 0.5 pairs.

  

The modernization of the retail trade is giving a strong boost to the shoe market. The number of malls in India rose from 190 in 2010-11 to 280 in 2011-12. India's shoe retailers are still supplied for the most part by local manufacturers. Even foreign brands are selling their products mostly through them and through local retail groups. Some foreign brands such as Clarks or Timberland recently opened their own stores, which are mostly managed on a franchise basis.