NEW DELHI — India’s leather manufacturing industry is aiming to triple exports in the next five years.
The industry projects a jump to $7 billion from $2.4 billion in annual exports, according to its Vision 2010 plan. At the 14th Delhi International Leather Fair last week, executives were upbeat about the climate for growth in India. The country’s share of world leather exports is 3 percent, with 63 percent of these goods shipped to Europe and only 12 percent to the U.S.
Although the turnout of foreign buyers at the fair was low, international and domestic exhibitors showed the latest machinery and finished leather products, including apparel and accessories. Many exhibitors showed interest in testing the latest in manufacturing technology as they look to ramp up production and infrastructure.
India’s main competitor, China, has factories that are better suited for high-volume leather manufacturing, said Council for Leather Exports chairman Rafeeque Ahmed, who also heads one of the country’s largest leather manufacturing companies, Farida.
“At the moment, Indian factories are more suitable for the European markets, which need relatively smaller volume, but varied designs and workmanship,” Ahmed said.
That is quickly changing because of the shift in market demands, he noted.
“China is facing an acute shortage of labor coupled with an increase in wages, which makes it less attractive,” Ahmed said. “Taiwanese footwear giant Apache, which manufactures for Adidas, has bought 350 acres of land in India and will be employing 12,000 people in just one manufacturing facility.”
Indian manufacturers said that in order to achieve the projected growth, they need to attract more foreign investment like that of Apache. The government, which recently amended laws to allow for more foreign direct investment, is setting up five Special Economic Zones specifically catering to the leather industry. The zones offer lower tariffs and reliable infrastructure to lure international manufacturers that may be concerned about India’s inefficiencies.
The Indian government sees huge potential in the leather industry.
“We will be launching a worldwide marketing campaign to promote ‘Brand India’ leather,” said Ajay Dua, India’s Secretary for Industrial Promotion.
India has the largest cattle population in the world and the second largest livestock population.
“We are logically in a place to be a leader in the industry,” said Pawan Dawar, managing director of leather manufacturer Dawar.
However, in a majority Hindu country, where cows are sacred and roam freely in the streets, there are strict laws that govern where slaughterhouses can exist. Leather manufacturing has traditionally been dominated by Muslims, although this is changing as more entrepreneurs see the industry’s potential. There are 2.5 million people employed in India’s leather industry. A recent report by Exim Bank in India projects another million jobs will be added in the next five years.
“Our skilled workers have been doing this kind of work for centuries,” said Anil Budhiraj, managing director of Drishti, which manufactures clothing and leather accessories for companies such as Gap and Urban Outfitters. “We won’t necessarily be doing luxury goods like Gucci right now, but we have proven to be quite adept at handling midrange brands.”
India has already set a foundation for strong intellectual property rights laws, protecting manufacturers from the rampant copyright issues that plague China.
“IPR is a major draw for big brands looking to set up research and development in manufacturing in India,” said Anil Sahoo, country director of Adidas Group in India.