Leather Industry: advantage India

08:32 | 23/07/2017 Cooperation

(VEN) - The Indian leather industry is now a prominent global exporter of high quality leather products and footwear. Foreign Direct Investment (FDI) policy now allows 100 percent FDI through automatic route and several other policy initiatives are in place to assist in further development of the industry.

The Indian leather industry is perfectly poised not only for sourcing but also for joint ventures / technical collaborations, owing to the pro-active efforts of the industry and the enabling government policies.

India is endowed with 20 percent of world cattle and buffalo and 11 percent of world goat and sheep population. It has a very strong tanning base. Traditional knowhow combined with application of modern tanning techniques have allowed the Indian Tanning Industry to produce 2.5 billion square feet of leather annually, accounting for 13 percent of the global production of leather. Vietnam on the other hand imports millions of square meters of tanned leather for its leather Industry. Out of Vietnamese leather and raw leather materials import of about US$1.5billion in 2016, imports from India accounted to only about 5.5 percent, which can be increased substantially given the size of the Indian leather industry.

Production and exports

India is the second largest footwear producer with annual production of over two billion pairs. The domestic retail market absorbs more than 95 percent of this output. On the export front, footwear makes up about 42 percent of total exports, with men’s footwear taking the lion’s share.

The Indian leather garment industry is the second largest producer with annual production capacity of 16 million pieces and is the third largest global exporter. It has an annual production capacity of 63 million pieces of leather articles, 52 million pairs of industrial gloves and 12.50 million pieces of harness and saddler items. India is the fifth largest global exporter of leather goods and accessories.

Renowned institutions like Central Leather Research Institute (CLRI), Footwear Design and Development Institute (FDDI), National Institute of Fashion Technology (NIFT), Central Footwear Training Institute (CFTI) etc., provide the required technical support and consultancy services to the Indian leather industry in areas of environment management, product design and development, human resources development etc.

Indian leather exports in 2015-16 were about US$6 billion, of which value added leather products and footwear constitute about 80 percent of exports, destined for more than 70 countries.

Total turnover of the Indian leather and footwear industry

The total turnover of the Indian leather, leather products and industry is estimated to be US$18 billion, of which exports account for US$6 billion and domestic market US$12 billion.

Domestic market in India

The Indian retail industry is estimated to be at US$600 billion and is the fifth largest in the world. It accounts for over 10 percent of India’s GDP and is expected to reach US$1 trillion by 2020 (Domestic footwear consumption is expected to reach up to five billion pairs by 2020). The e-commerce sales are expected to touch US$120 billion in 2020 from US$30 billion seen in 2016.

Make in India

The Indian leather industry is one of the focus sectors under Make in India initiative of the government. Huge production centers in the form of Mega Leather Clusters (MLC) with all required infrastructure are being set up and Vietnamese companies can set-up joint ventures in India for tapping the domestic market or setting up export oriented units. India is emerging as a key production center and several locales have ready grounding / infrastructure / workforce for this industry.

Indian leather industry – a key supplier of finished leather

As mentioned above, India accounts for about 13 percent of global production of leathers. Traditional tanning knowledge combined with technical support of institutions like the Central Leather Research Institute have helped the Indian tanning industry to produce some of the finest leathers in the world.

About 70-80 percent of the colors chosen in Modeurop (MODEUROP is an International Institution founded in 1960 in Zurich / Switzerland by the most important institutions of the leather and footwear industry. MODEUROP forecasts fashion and trends in leathers, colors and materials for the international market, three seasons ahead) are from India which shows the huge capability of India in producing leathers according to the latest trends.

The Indian leather industry is today one of the most promising sectors ripe for investment, trade and joint ventures in India, with highlights being:
- Ready availability of raw material;
- Excellent tanning facilities;
- Favorable government policies supporting ‘Make in India’;
- Permission to 100 percent FDI via automatic route and repatriation of profits and dividends;
- A vast domestic retail space fuelled by a young population (more than 50 percent below 35 years of age out of about 1.25 billion population);

Council for Leather Exports (http://leatherindia.org/), sponsored by the Ministry of Commerce and Industry, the government of India, is a leading trade promotion council of India (with more than 3,100 members); an innovator and enabler in forging of ties between the leather industries of the two countries. It welcomes any query on the Indian leather industry, which may be posed by the Vietnamese leather industry to email ID: cle@cleindia.com or through the Consulate General of India in Ho Chi Minh City by emailing to: com.hcm@mea.gov.in or hoc.hcm@mea.gov.in

The Indian leather Industry has grown from a mere supplier of raw materials to a reliable source of high quality leather products and footwear. It is now the second largest producer of footwear and leather garments and fifth largest exporter of leather goods and accessories.

Consulate General of India, Ho Chi Minh City