India’s leather and footwear export sector is set to experience significant growth, with projections indicating a 12% increase in exports, reaching US$ 5.3 billion in the current fiscal year. This growth is attributed to strong demand from key global markets, particularly from the United States and the United Kingdom. According to Rajendra Kumar Jalan, Chairman of the Council for Leather Exports (CLE), the demand for Indian leather goods remains robust, and the order books for the upcoming months are promising. The sector is experiencing an uptick in interest from several international companies, especially from the US, looking to set up manufacturing bases in India, further solidifying India’s position in the global leather market.

Labour-Intensive Industry with a Strong Employment Footprint

The Indian leather industry is one of the largest labour-intensive sectors, employing approximately 4.2 million individuals. The total turnover of the leather industry stands at US$ 19 billion, which includes about US$ 5 billion from exports. Given its scale, the sector plays a vital role in the country’s economic landscape and employment generation, offering significant potential for growth.

Ambitious Growth Projections by 2030

Looking towards the future, the CLE has set an ambitious target for the leather sector. The industry is projected to achieve a total turnover of US$ 47 billion by 2030, with US$ 25 billion expected to come from domestic production and US$ 13.7 billion from export revenues. This would represent a substantial increase in both the domestic and international markets for leather products, driven by growing global demand, particularly from developed markets.

Support from Government for Sectoral Growth

To achieve these ambitious targets, Jalan has urged the Indian government to extend the Production-Linked Incentive (PLI) Scheme to the leather sector, similar to other manufacturing sectors that have benefited from the scheme. Extending the PLI could create an additional 700,000 to 800,000 jobs, significantly boosting the sector's growth and employment generation.

Another key request from the CLE is the removal of the 20% export duty on wet blue and crust leather, which are intermediary products in the leather manufacturing process. The current export duties increase costs and make Indian leather products less competitive in the international markets. Furthermore, Jalan has called for the elimination of import duties on finished leather, which would help reduce production costs and make Indian leather goods more affordable globally.

Growing Global Demand and Market Expansion

The growth of India’s leather exports is not only a result of strong demand in traditional markets like the US and EU, but also the increased need for leather products across various industries, including automobile and fashion sectors. According to Yadvendra Singh Sachan, Managing Director of Growmore International Ltd, the US and EU markets are seeing healthy growth rates, and the domestic industry must work to enhance the scale and branding of Indian leather goods. By focusing on both global and domestic markets, India can expand its presence in premium leather product segments, which are gaining traction worldwide.

Key Challenges and Opportunities

While the growth outlook is positive, challenges remain. The demand for Indian leather goods is outpacing the current production capabilities in some areas, and addressing this gap will require strategic investments in manufacturing technology, supply chain efficiencies, and product innovation. The sector also needs to focus on improving its sustainability practices, as global consumers are increasingly demanding ethically produced and environmentally friendly products.

On the opportunity front, India’s expanding manufacturing capabilities and the country’s position as a cost-effective producer of quality leather products offer a unique advantage in the global market. With international companies looking to set up bases in India and the country’s strong export infrastructure, the Indian leather industry is well-positioned for continued growth in the coming years.

Conclusion

India’s leather export sector is on track to see significant growth in FY 2024, with projections to hit US$ 5.3 billion, a 12% increase from the previous year. This growth is largely driven by demand from the US and UK markets and an increasing interest from international companies to establish manufacturing bases in India. With strategic government support, particularly in the form of the PLI Scheme, the leather sector could continue to expand, creating jobs and increasing export revenue. The sector’s future is bright, with potential to contribute substantially to India’s economic growth and employment generation by 2030.