Agra footwear industry hit by global slowdown, supply crunch
According to Agra Footwear Manufacturers and Exporters' Chamber (AFMEC) exports decreased to Rs 2,200 crore in April-January 2015-16, which was about Rs 220 crore lower than in the same period the previous year.
Agra's footwear industry is famous around the world, with the city contributing a significant amount to the total footwear exports from India. Agra has more than 100 footwear manufacturers who together make up 28% of all footwear products exported.
Analysis of export data for eight years between 2007-08 and 2014-15 shows an average annual growth rate of over 11% in this period and hence the loss is unprecedented in recent memory.
"The global slowdown has affected everyone. We are getting far fewer export orders compared to earlier years. Goods manufactured for European retailers are yet to leave Agra and many foreign retailers are not giving fresh orders," said Puran Dawar, president of AFMEC, talking to TOI.
Apart from the slowdown and reduced demand for exports, the industry has also suffered because of the recent Chennai floods. Nearly 60% of the leather used by the industry comes from Chennai itself, where production got severely hit by the floods. Since humidity causes damage to leather, raw material supply to Agra was hit, as well as production of fresh supplies after the floods. According to footwear makers, supply constraints due to the floods caused delays in sending export consignments abroad, with losses predicted to be Rs 150-200 crore. Manufacturers had also expressed apprehension that buyers might migrate to footwear manufacturers in China due to these problems.
It's not the manufacturers alone who are feeling the brunt of the ongoing global slowdown as labour has also been affected. Industry experts said that about 35% of the cost of producing an item of footwear is the remuneration given to the worker who makes the product. The overall loss of Rs 220 crore translates to about Rs 76 crore at the worker's level.