Aqeel Panaruna, chairman of the Council for Leather Exports (CLE), said that besides raw material, India imports components like shoe sole, insole, and others that need to be manufactured locally. He added that the government should set up more leather parks and ease FDI policy to decrease import dependency.
Recent developments like the definition of MSMEs, differing payment, and sub-intervention have given some comfort.
Reducing the import of finished products from China is another area that warrants attention, Panaruna cautioned.
Rafeeque M Ahmed, president of the All India Hides and Skins Tanners and Merchants Association, said increasing duty alone would not reduce imports. The focus should be on developing an eco-system like that of China Price and variety are major challenges. Indian firms quote $10, compared to $8 by Chinese ones.
While an Indian firm offers a mere four varieties to a retailer seeking 40 varieties or designs, China has created an interesting sourcing model.
Quanzhou, dubbed as ‘Shoe City’, churns out more than 500 million pairs of sneakers annually, accounting for a quarter of the country’s overall output.
“This is what we should look at — design varieties, availability in smaller quantities, hassle-free experience to buyers (domestic or global),” says Ahmed.
N Mohan, convenor of the Non-Leather Footwear panel under CLE’s ‘Make in India
Programme’, says India needs to create a ‘Plug and Play’ model as well as clusters like China. "The industry needs to partner with Taiwanese firms that have created production facilities in Vietnam and Bangladesh, and also sign free-trade agreements with the US and Europe," he added.
Further, Mohan recommended that to make India an export hub, focus should be on non-leather footwear. As most European countries and the US are battered by concentrated supply chains, India could position itself as a low-cost, high-quality opportunity for supply chain diversification.
Taj Alam, vice-chairman, Uttar Pradesh Leather Industries Association’s (UPLIA’s) Unnao Chapter, appreciated the due importance given by PM Modi to the leather industry, which is among the top five foreign exchange contributor and a huge employment generator. On an investment of every Rs 50,000, one job can be created in the labor-intensive sector.
Alam added that the need of the hour was to frame policies to lure domestic and foreign investors. "Today, leather exports have shrunk to $4.5 billion from $7.5 billion a few years ago," he said.
"Leather buyers have moved out from India following the closure of tanneries and slaughterhouses after the Kumbh Mela, because supplies came to a virtual standstill. The government should look at some real stimulus to MSMEs in form of grant-in-aid, and not just loans at a low interest rate," he added.
To reduce dependence on imported metallic hardware, embellishments, zippers, and other inputs for manufacturing leather goods, the country needs an eco-system of industrial parks and economic zones to accommodate MSMEs.