Indian leather exporters target China21 December 2011
Even as the euro zone crisis may result in decline in orders next year, Indian leather exporters are hoping that the likely diversion of some exports from China to India will partly compensate the drop in orders from Europe.
‘The European Union is the traditional and largest market for Indian leather products. About 67% of our leather exports are directed to EU. The present trend in Europe is definitely slow and the economic crisis has affected the demand making importers very cautious and conservative. There is a projected drop of 20-25% predicted by buyers for the year 2012,’ Ali Ahmed Khan, executive director, Council for Leather Exports (CLE) told the Indian Financial Chronicle.
Other potential markets that are being tapped are the USA, Japan, Russia, Canada and Australia, among others. However, we will be able to see the results only from the last quarter of 2012. Again this will really not fully compensate the slowdown of the traditional markets.
‘China is facing higher costs and a shortage in labour. We expect that some of the orders from EU to China get diverted to India and this would partly compensate the order drop estimates,’ he added.
The global leather trade is estimated at US$116 billion and India’s share is about $3.5 billion, a share of just 3% despite the availability of huge manpower and the raw material base, the country has. However, China’s share in global leather trade is 22% at $25 billion. Interestingly, 12-15 years ago, both China and India were at the same level, doing about a billion dollars worth of exports.
‘Besides expanding their production capacity in a rapid way, Chinese leather manufacturers went ahead and acquired companies and brands in markets such as US. This had given them easy access to these markets and boost their exports in quick period,’ M Rafeeque Ahmed, chairman, CLE said.
He said Indian companies are now scouting for such opportunities in the US market, which accounts for about 9% of Indian leather exports. Indian leather firms would be looking at footwear brands and distribution companies in the US.
In leather garments India and China are strong competitors and India is the second largest producer of leather garments, next only to China, which makes 70 million pieces of the total global trade volume of about 120 million pieces. India’s annual garments production capacity is about 16 million pieces.