Leather industry upbeat after Jaitley’s Budget, TN to gain the most

By: Himanshi Chaudhary

Chennai: Indian leather industry, which had witnessed negative export growth, sees a silver lining in the Union Budget presented by Finance Minister Arun Jaitley on Wednesday.

For the 2015-2016 fiscal year, India’s leather exports totalled 5.92 billion dollars while domestic leather sales accounted for another 6 billion dollars in sales. The Indian leather industry accounts for around 12.9 percent of the world’s leather production of hides/skins. The country ranks second in terms of footwear and leather garments production in the world. Despite these massive numbers, India’s leather industry shrunk by 10 percent in the past year

Launch of the scheme for the labour intensive leather and footwear sector, similar to the existing one for textiles will boost its growth and will help in the creation of jobs.

stastistics for leather export
statistics for leather export

Package for the leather industry would indirectly benefit Tamil Nadu as it commands 40% of the total leather exports out of India. 32nd India International Leather Fair, a four day event at the Chennai Trade Centre was tinted in joy after the budget as it witnessed overwhelming numbers by manufacturers, retailers, designers as well as exporters from around the world.

The event showcased products like exhibit a fascinating range of finished leather goods, footwear and footwear components, leather garments and goods, fashion accessories, machinery and equipment and chemicals and more. This trade fair brought to the fore tips and information on latest trends, styles, colour patterns as well as material preferences that are in demand in the global leather markets for manufacturers to take cues and implement in their own business to reap more benefits

picture credits: Businesss Standard
picture credits: Businesss Standard

Rafeeque Ahmed, chairman of  Farida group and India shoes pvt. Ltd., Chennai said, Tamil Nadu’s 400 leather factories,  employed nearly 1.5 lakh people. After the budget, there could be an addition of 1 lakh jobs. “We are also hopeful of a leather park being set up in the state, which is most likely to be constructed in Trichy,” he added.

“Normally we had 10 per cent growth, but due to the recession there was 7-8 per cent drop in exports by March 2016, compared to 2015,” he said.The country’s overall merchandise exports have declined by 18.06 per cent year-on-year to USD 196.6 billion in April-December period of the current fiscal. The outward shipments were on the decline for 13th straight month in December, contracting 14.75 per cent to USD 22.2 billion in the month due to a steep fall in shipment of petroleum products and engineering goods amid moderate global demand.

Overall we are looking at 12-14 per cent growth next year (2016-17), he noted. “Leather is a focus product under the Make in India campaign. Foreign (leather) companies have to come and invest here because there will be flow of foreign currency into India. With that as a special area, we focus on five countries, USA, Brazil, China, Germany and Italy”, he added.

Jamal Ahmad Lari, Director of Aftab leathers pvt. Ltd. Said that the move could boost leather exports which recorded negative growth in the last two years owing to the beef ban and unfavourable market conditions in the European Union

Giving importance to Make in India Initiative, the package is much more significant as the commerce and industry ministry had suggested incentives for the leather and footwear sector.

The commerce ministry has asked for about Rs 7,000 crore for this programme for three years. The industry has also demanded cut in excise duty to 6 per cent from 12 per cent for non-leather products like foot wears till the Goods and Service Tax comes into force.

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