The EN Moorthy Committee, in 1992, had pegged India's share of global leather trade by the turn of the century at 10 per cent. With barely two years to go, the current share is a mere 4 per cent. The working group on leather and leather products for the Ninth Plan (1997-2002) had projected an export target of $4.5 billion by 2002. Exports currently stand at $1.5 billion.Is a four-fold increase possible in four years? The Council for Leather Exports (CLE), the cardinal factor in the export promotion of leather and leather products, does not want to say: "No". But it isn't quite saying yes, either. ``Indian leather industry is confident of reaching new heights on the export front in the coming years and will continue to be one of the major foreign exchange earners,'' says CLE chairman Rafeeq Ahmed bravely, albeit without specifying any altitudes.
Indian leather and leather product exports had touched an all-time high of $1,752.34 million in 1995-96 against $1,558.60 million in 1994-95. But the graph hasheaded southwards since. In 1996-97 it was $1,636.74 million. It fell again by 2.49 per cent in 1997-98 to $1,595.98 million.
The major export items (export earnings for 1997-98 in million dollars in brackets) of the leather industry are footwear (287.08), footwear components like shoe uppers, soles etc (230.51), leather garments (418.22), leather goods, including saddlery & harnesses, gloves etc (372.37) and finished leather (287.8).
The export decline in 1997-98 has been in foot wear, which slipped -15. 82 per cent over the previous year, leather garments (-0.86 per cent) and finished leather, which dropped 3.77 per cent. But leather goods and footwear components exports were up six per cent and 3.15 per cent, respectively.
Seventy five per cent of India's exports are to eight countries: They are, (figures are for 1996-97), Germany (23 per cent), the US (18.54 per cent), the UK (12.4 per cent), Italy (11.71 per cent), France (4.26 per cent), Spain (3.46 per cent), Russia (2.2 per cent) and Australia(2.09 per cent).
Almost 80 per cent of the exports are leather products and 20 per cent value-added finished leather. In 1956-57 finished products constituted only seven per cent. The rest were raw, semi-finished or finished leather. There is no export of raw or semi-finished leather now. The reasons for the decline in exports are both external and internal.
The external reasons are:
Overall recession in Europe Constant fluctuation in European currencies particularly Deutsche mark as Germany accounts for 23 per cent of India's exports. Emergence of China , Indonesia, Thailand and Vietnam as major manufacturing countries. New production facilities in east European countries like Poland, Romania, Czech and Slovak Republics, Macedonia and AlbaniaThe Internal factors for the slow down in exports are:
Mass closure of tanneries during 1996-97 Lack of modernisation efforts in the industry Frequent policy changes by the government.TheCLE has outlined several short-term measures needed for sustained growth and enhancing exports. They include removal of inputs value restriction under QBAL scheme, enhancement of credit rates under DEPB scheme, removal of ceiling on duty drawback, budgetary concessions on capital goods and inputs, new market development, and assistance for brand promotion and market development.
The major long-term measures include modernisation of tanning industry and attracting fresh investments into tanning sector, dereservation of footwear industry and development of components industry.
Almost 50 per cent of Indian exports of leather and leather products are from Tamil Nadu. The balance is from centres like Kanpur, Calcutta, Delhi, Jalandhar, Mumbai and Bangalore. ``If these centres are also geared up, exports can grow further,'' says Ahmed.
But it may already be too late. China has emerged as a major competitor and role model in export efforts. It is dominating the world market in leather products and India isfalling further behind.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
