CLE eyes doubling leather exports to $10 b in 6 years
The Council has chalked out a detailed action plan – Strategy for Growth of Leather Sector – for next seven years to regain the sector’s lost glory (India’s leather exports touched a peak of $6.49 billion in 2014-15).
The report, a copy of which is available with BusinessLine, was submitted to Union Minister for Commerce and Industry Suresh Prabhu at a function organised by CLE in the city on Saturday.
India’s leather sector produces 2.5 million sq ft of leather and accounts for 13 per cent of global leather production; manufactures products worth $18 billion (over 90 per cent consumed locally) and is world’s second largest producer of footwear and leather garments after China, and fifth largest exporter of leather goods and accessories. While leather exports from China declined by about 11 per cent in 2016-17, exports from Vietnam increased by nearly 46 per cent.
Govt support sought
This reflects a shift in capacity from China to Vietnam where large factories have come up to meet huge volume requirements of markets like the US.
“This trend is affecting us and we need to scale up quickly,” said CLE Chairman Mukhtarul Amin at the function.
“We need government support in getting land at cheaper rates for mega units and favourable labour laws keeping in view the seasonal nature of the industry, and availability of finance at lower interest rates.”
The decline in exports for three successive years was due to lower intake in China, Vietnam, Italy and Korea – that totally accounts for 65 per cent of India’s exports, said the Council, which focuses on export promotion activities and development of the Indian leather industry.
The industry was unable to export finished leathers with light/pastel shades that are in demand in global markets as leathers do not qualify under present finished leather norms. The Council, in association with Central Leather Research Institute, is firming up a draft revised finished leather norms for consideration of the Department of Commerce. Garments with fur lining could not be exported due to ban on import of fox mink, chinchilla fur skins and reptile fur skins since January 2017.
Lower market penetration in segments like long and waist coats, children garments and pants/shorts also led to decline in exports.
Recession in the European market, combined with competition from China, Bangladesh, Vietnam, Romania and Poland, caused stagnation in exports to the European Union. There is a lower penetration in the US market in the absence of huge volume production.
India’s exports to the US grew to $847 million in 2017-18 from $526 million in 2012-13, but this growth is far lower than that posted by China or Vietnam.
Favourable labour law is required to put up large-scale factories. India should adopt the models prevalent in countries such as China, Vietnam and Bangladesh. Vietnam offers five-year tax holiday for 100 per cent FDI and joint venture units while in Bangladesh land is available at cheap cost for new units and 15 per cent cash incentive is offered for exports, the report said.
The Council’s action plan includes enhancing production under Make in India, enhance exports of ladies, children and non-leather footwear and fur garments/waist coast and enhance share in traditional markets and penetrate new markets.