Leather exports up in H1; 30% fall seen in coming months

chennai: Export of leather and leather products registered a significant increase during April-September 2008 but the export scenario is expected to become grim in the coming months owing to economic meltdown.

The export of leather and leather-based products stood at Rs 8,524.73 crore during April-September 2008 and registered a 19.97% rise in rupee terms and 14.80% in dollar terms compared to the same period last year. The export in the first half has touched 49.89% of the target $4,000 million for 2008-09. But exporters and industry organisation allay fear that the target would be missed by about 30% due to crisis.

Export of finished leather increased 1.77% during the first half of this fiscal at $409.12 million, footwear gone up 16.15% at $ 6,66.72 million, footwear components raised 6.91% at $151.06 million, leather garments up 29.18% at $225.25 million and leather goods recorded a 26.16% rise at $467.58 million.

Captains of leather industry have observed 20-30% reduction in export orders. It started declining in November and continued in December and is further expected to aggravate in the coming months. Chairman of council for leather exports (CLE) Habib Hussain said, “We have never seen in living memory a crisis of this magnitude. Nobody is sure of anything. Existing scientific parameters to assess the market demand and sales projections are not working.”

He said the dominant markets for the Indian leather products are Europe and the US. There has been a dramatic fall in retail business in these countries affecting exports from the manufacturing countries. “There was also an opportunity amid this crisis to be innovative and different and we need to upgrade our leather, introduce new designs for products at cheaper prices,” he added. The government also has to step in with relief and promotional packages, Hussain said.

Leather manufacturers and exporters association head Rafeeq Ahmed said the Tamil Nadu government is not yet aware of the seriousness of the problem faced by the export-oriented industries. “Proactive and creative steps are needed from the government and industry to face this situation. We have to create excellent and economic products that can sell and it has to be done immediately. For this industry has to be given a lot more government assistance,” Ahmed said.

Finished leather manufacturers and exporters association president Zackria Sait said the tanning industry was the first to be hit by the global meltdown. Capacity utilisation in tanneries had come down to 80% by November 2008. It fell further to 40-30% by January 2009. The industry has factored in 20-30% cut in orders and exports. “If the actuals are going to be bigger than this, there will be greater problems for the industry and workers,” Sait said.

Mohan Srinivas, a leading garment exporter said there had been a turnaround in the exports of leather garments in the early months of this fiscal. Introduction of new designs and new products might have helped this, he said.

While many feel closure of large number of leather garment factories in China is one of the major reasons for the rise in leather garment exports form India.

Sources :- The Financial Express