Having crossed the $2 billion (Rs 9,060 crore) mark in exports in the last financial year, the Indian leather industry on Monday last became the eighth highest earner of foreign exchange in the country. However, this figure masks a curious trend that has been noticed in the past two years - the export of leather garments from India has gone down while that of leather footwear is up. This was among the many trends discussed at the Delhi International Leather Fair (DILF) that concluded this weekend in the Capital.
According to figures provided by the India Trade Promotion Organisation, the export of leather footwear has increased from $381.37 million (Rs 1,730 crore approximately) in 2000-01 to $409.67 million (Rs 1,840 crore) in 2002-03, while that of leather garments has gone down from $460 million (Rs 2,085 crore) in 2000-2001 to $262.25 million (Rs 1,190 crore) in 2002-03.
Industry insiders, when asked for the reason behind this trend, answer unanimously: the China factor. Compared to India’s share of less than 3 per cent in the international leather export trade, China’s share is a massive 55 per cent (approximately). And the reasons are not hard to find, if the participants at DILF are to be believed. Said B.N. Das, a scientist with the Central Leather Research Institute, Chennai, “China has huge infrastructure and can provide large volumes, which we in India can’t. But we must remember that China provides lower quality stuff which fetches lower prices.”
Sanjay Leekha, Chairman (northern region) of the Delhi-based Council for Leather Exports, adds that India has a nearly 60 per cent share in the high-end leather garments export business. “The international average price of a leather garment is $35 (Rs 1,585). And the average price of a garment coming from India is $75 (Rs 3,400). So clearly, we are targeting the niche high-end customer,” he says.
According to Das, it is harder to capture a larger part of that segment when India’s share in the high-end leather garments market is already 60 per cent. “So it boils down to matching other players, particularly China, in the lower-end market, for which we are experimenting with the use of splits and lower-grade leather,” he says.
Exporters also point towards other factors for the falling global sales - the global recession and the cyclical nature of the fashion market being the primary ones. However, none of these factors seems to apply to the export of leather footwear from India, which has registered an increase of 12 per cent over the past three years.
According to industry estimates, India will be exporting leather and leather products worth $2,614 million (Rs 11,850 crore) by 2006-07. The optimism notwithstanding, the Indian leather industry still has a long way to go to grab a bigger market share.
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