Euro crisis drags leather exports, second half of year may be better

Leather exports from India have seen a marginal drop in dollar terms in the first half of current financial year, while it was up double digit in rupee terms. However, the industry expects the second half to be better and exports for the full year may not see double-digit growth like last year, but will settle for a single digit rise amid woes in European economy.

For the half year ended September 30, leather exports from India stood at $2,449.70 million against $2,537.27 million in the corresponding period of previous financial year, down by 3.45 per cent. However, exports were up 17 per cent in rupee terms at Rs 13,391 crore against Rs 11,479 crore in the same period previous year.

“We had a strong growth year in last financial year. This marginal drop in dollar terms mainly the effect of high base of previous financial year. However, second half of current financial year is better. We are not very optimistic about registering previous year’s growth, but it will be a flat or single digit growth (5-7 per cent) year,” M Rafeeque Ahmed, chairman, Council for Leather Exports told Financial Chronicle.

Export of finished leather, leather footwear, leather garments, leather goods & accessories, saddlery and harness and non-leather footwear have shown positive growth in rupee terms. Only finished leather, leather goods & accessories, and non-leather footwear have shown positive growth in dollar terms. Declining trend is seen in export of leather footwear, footwear components, leather garments and saddlery & harness due to rupee depreciation, according to a statement of CLE.

The top eight export destinations are Germany, USA, UK, Italy, France, Hong Kong, Spain and Netherlands and these countries account for a little over 70 per cent of our total exports. However, during the first half of this financial year, barring USA, Hong Kong and UK, other six markets consumed lesser Indian goods. Leather exports to Germany and Italy – top two consumers of Indian leather goods -- saw decline of 22 per cent and 27 per cent respectively.

Export of leather & leather products to markets like Australia, New Zealand, Denmark, Canada, Japan, China, UAE and Saudi Arabia also reported positive growth during April-September 2012.

As the third and fourth quarters normally fetch some good orders, leather industry is hopeful of recording positive growth in the second half, supported by market promotional activities.

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