CHENNAI: The leather exports sector grew 20% in the first half of financial year 2009, registering a 20% rise over the previous year. But the
global slowdown and reduced orders — 33% month on month — has led to a fall in subsequent months, according to Council of Leather Exports chairman Habib Hussain.
Mr Hussain spoke to the media on the sidelines of announcing the 24th edition of the India International Leather Fair, which is to be held between January 31 and February 3 in Chennai. There are 393 exhibitors this year, 122 being foreign. The same figures stood at 400 and 132 last respectively year.
Although growth prospects look bleak, Mr Hussain suggested a threepronged approach to tackle the crisis. “Create the required infrastructure and have long-term plans, help those who’ve lost money because of the slowdown with term loans and treat main markets, like the US and Europe, as focus markets.”
The focus market scheme was introduced in 2006 to offset high freight cost and other disabilities faced in accessing select international markets.
This scheme allows duty credit facility of 2.5% of the FOB (free on board) value of exports to those countries. The European Union and the US are the two biggest markets for Indian leather (65% and 25% respectively) and are the worst affected in the financial crisis, which in turn has affected the Indian export scenario.
It is therefore prudent to treat these as focus markets now, Mr Hussain emphasised. He further said leather exporters would concentrate on toplines and not bottomlines. Many big global brands, including Coach, Tommy Hilfiger and Hugo Boss, source from India and the priority would now be to hold on to them and not to lose them to China— which corners a fifth of the international market— he said.
India’s share in the global $116-billion leather market is a minuscule Rs 3.5 billion. If all stakeholders work together, in five years, India can achieve a 10% share in the international leather basket, he later said. The domestic market is estimated to be worth around Rs 2.5 billion. The Indian leather sector (domestic and exports together) employs around 25 lakh people.
The Economic Times