Saturday, 29 July 2017

Watch out! Government stimulus likely to give new life to leather stocks

The Indian leather industry enjoys a predominant place in the economy. However, the industry is facing tough competition currently from Chinese manufacturers. In order to boost the leather industry, the Modi government is likely to approve a Rs 2,500 crore package against Rs 4,000 crore sought by the Department of Industrial Policy and Promotion (DIPP). The package, which is on the lines of the special package given to the garment industry last June, will be implemented over next three years till FY20-end.

The leather industry, which is highly labour intensive, is a focus area under the Modi government's 'Make in India' initiative, as it has massive potential for providing more employment, growth and to grow exports. With an aim to double productivity of the leather industry in next 10 years, the government has launched an Integrated Development of Leather Sector (IDLS) plan. The government is targeting leather revenues of $27 billion by 2020. It has already allowed 100 per cent FDI in the leather industry through the automatic route.

All these measures are expected to not only create jobs but also attract huge investment from foreign players. Globally, India is the second largest producer of footwear and second largest exporter of leather garments. The Indian leather industry accounts for around 12.93 per cent of the global leather production of hides/skins.

With growing demand, availability of skilled workforce, rising exports, easier raw material availability and government incentives, the sector is likely to get the boost. The growth in demand for leather will continue to come from the fashion industry, especially footwear.

Believing in the potential of the leather industry growth, many companies are following the strategy of driving store growth in both urban and tier II markets, apart from launching new collections.

Companies are collaborating with brands such as FBB, Colors, Femina Miss India 2017. It is expected that companies such as Bata IndiaBSE 0.71 %, Liberty ShoesBSE -0.92 %, Mirza InternationalBSE -2.87 %, RelaxoBSE -0.48 % Footwear, Super TanneryBSE 2.02 % will see good growth going forward.
http://economictimes.indiatimes.com/markets/stocks/news/watch-out-government-stimulus-likely-to-give-new-life-to-leather-stocks/articleshow/59819045.cms

 
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