Small business exports from india a look into the leather footwear industry revised copy

Small Business Exports from India: A look into the leather Footwear Industry By: Sanjeev Keswani The University of Findlay Ohio, USA

In the sixties, India was know for its Leather Raw Material export Today it is the major player in the finished goods sector of the market. In the Leather Industry, leather footwear takes a bigger share of global trade & is also the backbone of the Leather Industry It is ranked highly alongside the other top six foreign exchange earners of the country India exports 55% of their total leather footwear to Europe, U.K , USA, Australia & Africa& ranks 2nd after China Brief Introduction of the Industry

The Indian footwear factories have also achieved certification for ISO 9000, ISO 14000 & SA 8000(International Human Rights), (LeatherIndia.org, 2010). Currently the average growth rate estimate is 12%. The skilled and unskilled workers consist of nearly 50 % of the total workforce. Direct and Indirect employment figures are approximately 2.5 million, with 30% of that figure being women. It has especially given employment to women in the Southern part of India. (Global Economic Summit, 2011).

The Structure of the Leather Industry is quite separated. It is spread into segments, which are as follows: The main cities and states : In India, the cities of Ambur, Ranipet, Vaniyambadi, Trichi, and Dindigul, are key production sites for the leather industry. Also included in the list are the states of Chennai, Tamil Nadu, West Bengal, Uttar Pradesh ,Karnataka and Andhra Pradesh. There are more than 4000 Manufacturing units

Indian Leather Footwear Industry India produces and exports :ballerinas, booties, huaraches, tennis shoes, sandals, moccasins, dress and casual shoes Most manufacturers of modern footwear in India have established brands in Europe and Australia & Africa that they are supplying to. Facts & Figures Cont

Tanning and Finishing capacity The tanning and finishing capability for refining millions of pieces of hides and skins annually is scattered among different parts of the country The duty free (tax free) import of hides and skins from all over the world is a sign of strength and stability This is attracting for foreign companies looking to relocate. Facts & Figures Cont..

Indian Leather Goods Industry Germany is the major market for India’s leather goods at 14.45% followed by USA, UK, France and Italy Cows, Sheep, Goats and Buffaloes majorly account for this Industry. Facts & Figures Cont…

Established in 19th Century, with the major buyers being the Military and Police. India is 3rd biggest market of saddler and harness goods. There are 150 plants in an organized sector There are roughly 105 export oriented units The major producer of Saddler is Uttar Pradesh The Major consumers :Germany, U. K, USA, France, Netherlands, Japan, Australia and New Zealand. (leatehrindia.org, 2010). Facts & Figures Cont….

Indian Garments Industry In the mid 1980’s Indian leather Garment Industry entered the world of garment exports. Exports of $ 475 million are done as per 2011. (Apparel-India.com) Germany is the major destination of the leather garments exported from India Facts & Figures Cont…..

Hides-65 million pieces Skins- 170 million pieces Leather Footwear- 909 million pairs Leather shoe uppers- 100 million pairs Leather garments- 16 million pieces Leather goods- 63 million pieces Industrial gloves- 52 million pairs Saddler- 10 million pieces Facts & Figures Cont……

Strengths Elevated Growth Readily available, highly skilled, and cheap labor force Significant raw material availability(base) The initiatives taken by the Government for the change in the Policies Capability to incorporate new technologies required and to handle large projects Emphasis is given to continuous design up gradation & product development SWOT Analysis of the Indian Leather Industry

Weaknesses Lacking support from the government in terms of warehousing The fluctuation in International pricing The large size of work force are resulting in increased wages Lacking strong presence in the global fashion market Many unaware of international standards

Opportunities Potential to accelerate in the domestic market Cultivating fashion awareness globally Using decision support software(DSS) Software Asset Management (SAM,SAP) & information technology would help in eradicate the length of the production cycle required for different products

Threats Industry is unorganized in major parts The scope is limited for mobilizing funds through public issues & private placements (many of the businesses are owned by family) The difficulty of retrieving bank loans is resulting in costly private borrowing.

There is a Special Task force to look into minimization the techniques and control of pollution

Eco Friendly products are being used which can be reused and recycled. They have an “ECO-LABEL” on every box.Environmental aspects of the Leather Industry

There is Funding support that is provided for market development activities, export promotion, technological modernization & up gradation for production units. The entire leather sector is now de-licensed for facilitating expansion in terms of modern lines with equipments & state-of-the-art machinery. There is 100 % Foreign Direct Investment &Joint Ventures permitted Importing the specified machinery required in leather & footwear industry is allowed at a 5% concessional on import duty. Duty free import for specified critical inputs required for manufacturing the other leather products & leather garments including footwear under Duty Free Import Scheme (DFIS). Government Policies to Support the Industry

Government policies to Support the Leather Footwear Industry Cont. There are simplified import/export procedures, e.g. quick customs clearances. There is a program held for giving support to international market of the Leather Footwear products: known as Market Development Assistance (MDA) FMM &T ( footwear materials, Manufacturing & Technology) Program & IILF (India International Leather Fair) are great events to gain new opportunities in the industry; also to discover fresh ideas. The industry events provide a good chance for individuals seeking out their newest competitors, the latest trends, & sophisticated leather products and services

Government policies to Support the Industry Cont.. Tax benefits for the Software Technology Parks of India (STPI) and Export-Oriented Unit (EOU) have been extended till end 2011 which was going to end In March, 2011. ECGC (Export Credit Guarantee Corporation) provides protection against nonpayment of the exported goods to the importer. Draw backs are available on a pair bases for the exports, they are as follows: Rs 39 or 9% whichever is lower. 2% annual waver on the interest paid on the packing credit facility at the end of the year.

Data taken from : Index Mundi & Trading Economics

Data taken from: LeatherIndia.org

Small business exports from india a look into the leather footwear industry revised copy

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