Kanpur leather industry demands credit softening

Trapped between liquidity crunch and increasing production costs, Kanpur’s leather industrialists are protesting strongly against the inflated fuel prices.

The industry has been hit severely by the economic slowdown in the Western economies, which formed the primary market of the city’s leather exporters.

“We are finding it difficult to upgrade our technologies and undertake business expansion due to the hardening of interest rates by the Reserve Bank of India (RBI). While the governments in the US and Japan are lending at zero interest rates, we still have prohibitive interest rates,” said DC Pandey, general manager (finance), Mirza International.

The worst sufferers are over 150 small-scale units scattered over the city.

 

More than 60 per cent of these firms have closed production and retrenched the workers numbering over 2,000, according to an estimate.

“For the past four to six months, the traders had begun delaying payments on their IOUs and about 14-15 traders declared themselves bankrupt, creating an unprecedented cash crisis in the market,” said Taj Alam, a leading saddlery exporter from the city.

China is also offering stiff competition to Indian leather manufacturers amid decreased demand globally.

The export exemption duty given by the Chinese government is around 14 per cent, while the Indian government allows only 8 per cent, offering a “raw deal” to the manufacturers back home.