Footwear industry says it lost export orders worth $1 bn due to Covid-19

Says it may require support from government in the form of reduction in GST, especially for footwear priced above Rs 1,000

The footwear industry has lost export orders worth about $1 billion due to Covid-19 and may require support from the government in the form of reduction in GST, especially for footwear priced above Rs 1,000, to help improve demand. Retailers and suppliers alike must now deploy more targeted and thoughtful approaches to storage space and assortment, as many more consumers would migrate to online shopping, the industry said.

Aqeel Ahmed, chairman, Council For Leather Exports, confirmed that huge cancellations saw the industry lose around $1 billion worth of export orders. He added that there has been no work during the past two months, and many forward contracts and lines of credit are giving exporters a hard time.

Ahmed, however, said the industry expects businesses to shift to India. Exporters need hand-holding to survive this current period as the industry plans to project Brand India as a footwear hub post lockdown. 

A reasonable reduction in GST, especially for footwear priced above Rs 1,000, can help improve consumption. He was speaking at a webinar held by Confederation of Indian Footwear Industries.

The post lockdown strategic initiatives that can improve product performance and shopper engagement include retailers and suppliers employing more targeted and thoughtful approaches to storage space and assortment as many more consumers would migrate to online shopping. Retailers that swiftly make variations in order to deliver goods to shoppers during the crisis will benefit not only themselves, but shoppers as well.

N Mohan, executive director and CEO of Clarks, said India’s footwear consumption has been growing at a CAGR of 7.6 per cent. Improvement in per capita consumption to two pairs per person a year presents a huge opportunity. For every 1,000 pairs made and sold in India per day the industry can create 425 Jobs right from manufacturing through to allied industries to retail. The industry needs to focus on non-Leather footwear exports as worldwide 86 per cent of footwear by Volume consumed belongs to this category, he said.

There has been no income the past two months and this has put pressure on cash and inventories. Much of the industry would shrink by 20-30 per cent over last year, if the lockdown continues beyond June, Mohan said.

Ramesh Dua, MD, Relaxo Footwear, said it is important to amend labour laws so that entrepreneurs can confidently invest more in creating larger capacities. India has the capability and resources, but labour laws need amendment and the industry would be willing to invest in technologies if there is a focus on non-leather footwear.

The industry leaders plan to use this time to redefine their internal processes and build a lean and agile organisation that can adapt to the changing market environment. The leaders are confident the sector will come out of the current situation stronger and will see growth soon after the situation stabilises.