Leather exporters in Kanpur, Uttar Pradesh, are experiencing a boom in business despite the fall in the value of the rupee.
As rupee hits record lows, some investors see it headed towards the mid-60s against the dollar, a reflection of weak economic fundamentals and expectations the government will struggle to implement meaningful measures to reverse capital outflows.
The dip in the value of rupee is a matter of concern for the whole nation, while on the contrary it provided impetus to the leather industry in Kanpur as they made their mark in the international arena.
Kanpur is the most talked about city when it comes to leather industry as 95 percent of the leather products are exported to foreign countries.
A member of the Kanpur Export Association, Atul Mishra, said that the leather products manufactured in Kanpur has posed a challenge to China.
Europe and America had expressed their concern over the economic policies of China, while India's leather industry prevented the domination of Chinese leather products.
"At present the leather industry is gaining most from the fall in the value of rupee because their business is completely based on export. They sell their merchandise straight away to the foreign market and they are earning dollars. Therefore according to them they are benefitting the most," said Mishra.
The rupee has lost around 12 percent to the dollar since the beginning of May after the U.S. Federal Reserve said it would begin reducing its stimulus to the economy, prompting foreign investors to sell assets in emerging markets ranging from India to Brazil.
The rupee hit a record low of 61.80 on Tuesday, marking a 10 percent fall so far this year - the worst performer in emerging Asia in currencies tracked by Reuters. Over two years, it is down 26 percent.
India's record current deficit, currently at 4.8 percent of gross domestic product, is the primary reason behind the fall in the currency.
A leather trader, Himar Ahmed said that though export of leather during high exchange rates is proving beneficial to the traders but it brings loss to those who import raw material from the foreign market.
"When it comes to payments i.e. when a person exports and the payments are due, then at that time of the exchange rate is low then definitely the income is less. But as you just said that right now the exchange rate has hit 61.80 rupees ($ 1). So if during such period any payments come then definitely we tend to reap profit," said Ahmed.
The leather industry is helping to get foreign exchange in our country. While the country is facing the brunt of the economic slowdown, the leather industry is growing.
