| The leather industry overcame its problems to report export growth in 2004 after four years of flat sales.
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| Exports in dollar terms crossed the $ 2 billion mark while domestic sales grew 10 per cent.
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| The star performer in domestic and overseas markets was footwear, with sales rising over 30 per cent.
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| Export of leather garments also reversed its fall.
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| Exporters managed to move up the value chain and export of mere finished leather declined.
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| “Footwear will be the engine of export growth for the next 4-5 years while in the domestic sector, footwear is already the most important segment,” S S Kumar, chairman of Council for Leather Export (CLE), said.
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| Buoyed by the turnaround in 2004, CLE is aiming to double export by 2010.
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| “Segment-specific cluster development is the best way to do this, with focus on eco-friendly tanning and production processes,” he added.
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| A tanning cluster is being developed at Nellore, a footwear component park at Ambur (Tamil Nadu), a footwear park at Agra and a leather goods park in Kolkata.
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| However, some areas of concern remain.
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| Supply of raw leather is becoming increasingly tight as more and more states are banning slaughter of cows.
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| Indian producers may have to import raw leather from Africa and South America.
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| This could erode the competitive advantage enjoyed by India over China, Thailand and Vietnam.
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| At present, 1.8 million square metre of leather is processed in the country annually.
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| Doubling of export will require more raw leather, while leather goods like bags, wallets and belts may help in realising greater value.
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| Clearly, huge investments are needed but foreign investors have mostly stayed away and few joint ventures have come up.
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| Few Indian companies have tried to access the capital market to raise resources.
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| Most industry players have a poor corporate governance record because of their family rather than manager oriented ownership and and operational structure.
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| “Access to capital may restrict growth of the Indian leather industry in next five years,” admitted a source. |
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