Saurabh Gupta | 19 Jul, 2008
"The government need to reduce import duty on some essential components & raw material, which plays an important role in the production of leather goods," Mukhtarul Amin, Chairman, the council of leather export (CLE), told SME Times in an exclusive interview.

Excerpts of the interview...

India's footwear segment has recorded a 30.91 percent rise at $1,067 million till February '08. What is your reaction on this achievement?
Mukhtarul Amin: Well…we are happy and infect our expectations were little better because the cost of leather goods was going up in Eastern Europe and because of certain problems in China, we were expecting that the growth of footwear industry to be much batter.

But unfortunately due to certain reasons as increase in the cost of input, increase in the petroleum prices and more ever increase in our infrastructure and transition cost, which is still very high, adversely effected the growth of our industry.

Another thing is the inefficiency in our coat system. As footwear industry is very much dependent on some imported components, Indian component industry is not that much strong, so we have to import lots of components from other countries and when these things get delayed in our coat that overall make effect on the growth of the industry.

Earlier leather garments used to be the fastest-growing segment. But for the past few years footwear and accessories like bags, belts and wallets have taken the top slots. In your opinion what is the reason behind this?
Mukhtarul Amin: In the leather industry, footwear is the engine of the industry in every where in the world. The biggest consumption in the leather industry is the footwear. Earlier our footwear industry was not that much organized it was mainly in small scale or in cottage scale, still its most of the production is from small scale but not very organized now this industry is gradually organizing.

We also got support form our buyers also; we started producing our own designs so that helps the industry to bring it at the international level. And the second thing is off coerce fashion. The footwear industry has become a fashion now, earlier it was not so but now the concept is changing in the mind of consumers. Footwear is become a fashion status.

Here I must like to say that our industry is still not that big to cater US business, which is the biggest buyer of leather goods, so we are now concentrating to organize our industry in that way. So we required that much capacity or infrastructure to fulfill their demands. We are producing at 5000 pairs of footwear per day but we required to produce at least 10 to 15 thousand pairs per day.

And more over there is a setback in leather garment industry for the last three years…this year fortunately we got some growth but for last few years we got negative growth in the leather garment industry and that was mainly because of the China. Indian leather garment was in a basic garment manufacturing. And to compete with China in leather garment industry is not so easy because they develop more superior quality of leather from pig leather in compare to our sheep leather. Now Indian lather industry realized their mistake and we start picking up.

With European countries losing the cost advantages, manufacturing has shifted to Asia mainly China, Vietnam and India. What is your said on this?
Mukhtarul Amin: Yes…that is the fact and we are getting the advantage of that which reflects in our growth too.

Who are the major importers of Indian leather?
Mukhtarul Amin: The biggest market is Germany, then Europe, UK, Spain, which is picking fast, Italy, France these are the major countries. Europe is buying of its more then 50 percent of requirement from India.

India has less than 3 percent share in the global market compared to China's 20 percent. How you see China as a competitor?
Mukhtarul Amin: Yes..China is our biggest competitor. In China, leather factories have big infrastructure, big production capacity and the main thing is their infrastructure is being supported by the government.

More over up till now their most of the leather export was subsidized. They used to get different rate for the export and different for the domestic market so this was the biggest reason why we are behind them. Along with this the Chinese leather industry is concentrating more on the American market that also help them for improving their exports. And their government support for the export is very strong. Where ever they want to open warehouses they can, where ever they want to open an export house they can so they are getting all these supports from the government. Now China has investing very heavily in Africa for purchasing the raw material so this all help in the growth of Chines leather industry. 

Realizing the high growth potential of the industry, what leather export industry wants from the government?
Mukhtarul Amin: We need government support in developing infrastructure, in exports and in getting raw materials in the model the Chinese government does. We have recently suggested to the government for opening warehouses in India where foreign suppliers of leather raw materials and components can keep their stocks. This will ensure easy availability of raw materials to douse the increasing domestic demand of manufacturers

We have also requested our government to reduce the import duty on some essential components & raw material, which plays an important role in the production of leather goods.

Since the industry is growing in leaps and bounds, we also want our government to invest more in designing of leather products. Creating exquisite designs will increase the demand of our products in the overseas markets. We lack in skill development. That is another area where the authorities need to focus on. Our industry is very poor in designing and we are only working as a contract manufacturing hub.

We are capable of making good products. So the government needs to invest more on research and development (R&D) and on establishing institutes like NIFT. We need to show the world that we too can manufacture good designs on leather.

What is the USP of the Indian leather?
Mukhtarul Amin: The one major thing is the trust of our foreign buyers on our leather goods is the biggest USP of our leather. Beside that our good quality leather and our skilled labors are also playing an important role.

What are the key challenges for the the Indian leather export industry?
Mukhtarul Amin: We have major challenges from far-east countries like Vietnam, Indonesia, who are picking in this sector very fast. Even Bangladesh is doing well in leather sector and unfortunately our productivity, although we have skilled labor, is not good. So there is a need of some amendment in the labor also. And if we work more on our productivity and designing, we will definitely give them a big competition.

How council is doing to beat challenges?
Mukhtarul Amin: Well council is concentrating mainly to get development with the help of the government. council is concentrating to develop infrastructure, council is also exploring new markets in different countries.

We are also trying to make some marriages between India and developed countries to get more advanced and developed technology and also trying to meet different the delegations of the different countries to boost our export and production.

Council is also organizing different B2B event in and outside the nation to make availability of raw material and components.

PETA is one of the major challenge for leather export industry. How the industry is coping with this issue?
Mukhtarul Amin: PETA was the major challenge for leather industry previously but now PETA itself understands that it is not leather industry but it is mainly sheltering houses. And we as council itself guide and train our industry people about the importance of the animal welfare.

Due to rupee appreciation how much leather exports get effected?
Mukhtarul Amin: Yes...due to rupee appreciation the industry effected lot in-fact we have seen the negative growth of the industry due to rupee appreciation but now thing are getting normalize and our industry starts making profit again.

How you see the future of leather export?
Mukhtarul Amin: I saw a very bright and vital future of leather goods production and export.