Beef controversy makes a tear in leather industry
"The sudden uproar over beef in India has left importers in Europe and America scared. Export of leather and leather goods in April-June this year is down 11.1% against the corresponding period last year as buyers are no longer confident about placing orders. One of the largest foreign exchange earners, the industry is under threat due to the precipitation of a man-made crisis," said Ramesh Juneja, chairman of the Council for Leather Exports.
With exports taking a sharp dip after five years of continued growth, Juneja has pressed the alarm bell and made his concern known to the commerce ministry. "Under Prime Minister Narendra Modi's 'Make in India' programme, the commerce ministry had set an ambitious target of doubling export from $6.5 billion in 2014-15 to $13 billion in 2019-20. The overall industry growth during five years was pegged at $27 billion from $12 billion at present. That may get jeopardized by the exchange over beef," said Juneja. While slaughter of cows and buffaloes is permitted in Bengal, Kerala, Assam and rest of the north-east, Bengal sources a major chunk of hides from north and west India. Hides of cows that die naturally are sourced from Uttar Pradesh, Punjab, Rajasthan, Gujarat and Maharashtra. But with transport of hides affected in the past few months, the industry in Bengal that contributes to nearly half of leather goods exported from the country has taken a severe beating.
Export of finished leather from the east is down 18.5% in first quarter of 2015-16 against 2014-15; leather goods down 5.7%; footwear down 73.5%; leather gloves down 7.2% and non-leather footwear down 37.8%.
Imran Ahmed Khan, general secretary Calcutta Leather Complex Tanners' Association and CLE administration committee member, said blockage of trucks has led to a huge deficit of raw material and upset order delivery schedules. "Bengal generates about 35% of the hide that is processed here. The rest is procured from other states. The units here that have export commitments are now in a fix. As delivery is delayed, the goodwill among importers is getting diluted," explained Khan.
Units at Calcutta Leather Complex exports leather bags to Louis Vuitton, Prada, Debenhams, Zara and Gucci; finished leather for shoes upper and lining to Europe, Hong Kong and China and manufactures footwear, garments and gloves for both domestic and international markets.
The crisis over the beef rhetoric couldn't have happened at a worse time, feels Khan. With sentiments in Europe at an all-time low over the refugee crisis and the resultant weakening of the Euro, the uncertainty over orders placed in India has only exacerbated the situation.
"Exports to Germany has dropped 23.94%; France by 20.38%. Till not so long ago, leather units in Kolkata had to refuse orders. Now, we are hunting for orders. The situation would have been very different had we not created this crisis. We didn't have to make things more difficult than it already is," Khan added