Eurozone crisis hits Indian leather industry

While the industry was able to clock an average growth of nearly 23% during 2011-12, it was unlikely to maintain the trend during fiscal 2012-13, due to the ongoing Eurozone crisis.

Last year's growth would have been higher but for climatic changes in Europe that saw a curtailed winter season and early onset of spring. The current summer may also be longer than usual, leather makers fear. Besides, the volatility of Indian rupee had affected margins.

Talking to The Hindu, Aqeel Panaruna, regional chairman, south, Council for Leather Exports (CLE), said that the industry was not able to sell warm boots and garments since December and now would have to wait till next winter to liquidate existing stocks.

Last year, the leather industry reported a turnover of $4.72 billion, marking an increase of 22.9% growth over the corresponding period volume of $3.84 billion for 2010-11.

During 2009-10, the industry had reported a drop of 5.4% at $3.40 billion due to the global recessionary trend.

Predicting that 2012-13 will be a difficult year for the leather sector, Panaruna said that the industry was looking at the Russian and US markets too, as dependence on European markets alone would hurt revenue.

Indian leather exports mainly consist of leather and leather components, footwear, leather garments, leather goods and accessories, upholstery, saddlery and harness. About 70% of the products are exported to Europe.

In the international market, India faces its biggest competition from Bangladesh, in addition to China, Vietnam and Indonesia. Several foreign firms look at Bangladesh as an additional source for leather footwear owing to factors such as availability of cheap labour and lower cost of production when compared with India, Panaruna said.

Source: The Hindu