Impact Of Worldwide Slowdown On Leather Exports And Remedies

Problem behind leather export industries :

Indian Leather industry is moving towards an unprecedented crisis with the slowdown of worldwide economy. With all the economies of US, Europe and Japan plummeting with each other, India has also witnessed fall in GDP development from around 9% final monetary year to 7% in the present economic year. It is actually projected to dip even further to around five.five % - 6% for Year 2009 ?ten.

The leather exports sector which witnessed a growth 20% in the initial half of 2009 got dented by the worldwide slowdown in the subsequent months. The key explanation is attributed for the decline in orders from Western markets, specifically the US and UK. The European Union as well as the US will be the two greatest markets for Indian leather export firms which stand at 65% and 25% respectively with regards to India export share of Leather merchandise.

Secondly Chinese Govt. is generously helping Chinese exporters to stick to an aggressive exports policy which enable them to bag the orders in the competitors.

It's a matter of significant concern for our Leather Sector that is mainly dependent upon its exports as an alternative to domestic sales. Indian exports of leather is estimated at three.5 billion INR and its domestic market is hovering around 2.5 billion INR. The principle purpose behind this could possibly be that our leather market cannot depend on its domestic market as the retail sector is still immature to sell the export merchandise.
Leather exporters are getting inextricably caught inside a circumstance where buyers are delaying fresh orders in addition to delaying their payments on current orders and on prime of that they are also asking for large discounts. It seems that in the event the challenge is just not addressed on time, it would adversely impact the modest scale and tiny industries and also have an impact on huge organizations, major to job-loss and closure of units over the following few months.

It is actually estimated that about 2-3 lakh workers can lose their jobs in leather industry which has employed around 25 lakh total workers.

Treatments to enhance leather export industries:
Have to have on the hour would be to take proactive and logical steps to tackle the scenario proficiently which can only happen using the matched efforts on the a part of both Government and Sector.

Mr. Habib Hussain (Chairman of leather exports council) though addressing the challenge has recommended a three-pronged strategy to tackle the predicament.

?He emphasized on making the necessary infrastructure and have long-term plans,
?Offering subsidized term loans to exporters that have suffered losses resulting from slow down
?Treating US and Europe in concentrate markets scheme.
?Revolutionary item designs at competitive rates.
In addition to the above, some instant measures are needed to alleviate the plight with the leather exporters. Govt. need to enhance the drawback prices, minimize delays in export incentive reimbursement, Boost duty free of charge import limit for manufacturing exporter on the % of export value, and enhance weight age of leather goods beneath concentrate product scheme.

All these methods are necessary to retain the massive international brands which source from India which can otherwise go to China who has cost advantage to play with.