China gains leather export orders on rising Re

Indian leather products have very few takers in the international market due to appreciation of the rupee against major currencies, and China is benefiting from the situation.

At the ExpoRivaShuch Fair in Garda, Italy, last week, Indian companies could not get any firm orders largely due to the pricing. About 70 Indian companies participated in the fair, pegged as the most important event for footwear exporters.

"Business in the Indian pavilion was dull. Though there were many enquiries from buyers, the price quoted by Indian exporters in the wake of appreciating rupee put off many potential customers," Chairman of Council for Leather Exports Mukhtarhul Amin said.

He said the exporters were asking for higher prices as their realisations in rupee terms have come down. The Indian currency has risen 10 per cent against the dollar since the beginning of 2007 and 14 per cent since August 2006, hurting exporters.

Amin said as against the ¤1.85 million spot orders booked in June 2006, orders booked in this edition of the fair did not cross even half the mark.

The price offered by overseas buyers did not even cover the cost of the product and as such the whole exercise became a loss making activity.

"What India lost in export orders, China gained. Overseas buyers have moved to Chinese exporters since they could accept orders at the current Yuan-Dollar exchange rate. An estimated ¤300 million export order has gone to China in this fair alone," he said.

Once business goes to China, it would not be possible to get it to India, resulting in dwindling exports and loss of employment, Amin said. At this rate, he said, exporters would have to meet customers individually to place orders with them.

An estimated 2.5 million people are employed across the country in various sectors of the leather industry. If the current trend continues, exporters would be forced to lay off employees and eventually close down factories, he added.

Total leather exports from the country are likely to cross $3 billion this year with a growth rate of about 11 per cent over the previous year.

"However, if this issue of rising rupee is not addressed, not only would the exports decline, but all investment plans in the pipeline would be dropped, further reducing competency of the sector," he said.