Leather industry to take on competition from China
New Delhi, Nov 19: Despite severe shortage of skilled labour, the Indian Leather industry that focuses on premium products and leather goods is ready for competition from China.
''The leather industry in India operates in the premium segment therefore China is not a major threat to India. The leather sector is confident of taking on competition from China. The major constraint in the growth of this sector, however, is the severe shortage of skilled labour,'' said CII National Committee on Leather and Leather Products Chairman Syamal Gupta.
Though the Indian leather industry produces the requisite quality leather to beat China, it is unable to expand capacities due to lack of skilled labour and a pre-dominance of small and medium sized companies, limiting their ability to expand quickly.
Chinese leather industry ranks top on raw material resources, product yield and import and export trade in the world. China is a major competitor to India's leather sector as it has the capability to produce large volume at low prices.
According to Council of Leather Exports Chairman Rafeeque Ahmed, ''Shortage of labour has been a serious issue to compete at the global level. For labour law amendments for the leather sector, it would be ideal to follow the Textile Industry norms. In order to cope with the market demand, industry wants flexible working hours and shifts.'' While the leather sector has been identified as a priority sector by the National Manufacturing Competitiveness Council and Mission Mode implementation for leather and leather goods has been identified as a priority for 2006-07 by the Prime Minister, there are still many issues that the industry needs to deal with to exploit its potential to the fullest, he said.
''Currently the leather industry is handling up to one billion of footwear exports and is working on full capacity. The industry targets to reach four billion dollars. However, for this the leather production needs to be increased to four billion square feet from two billion square feet. There is also a need to develop skilled labour with a systematic and pragmatic approach,'' said CII Head (Manufacturing Services) Sarita Nagpal.
The industry order book is full, but is unable to deliver due to labour shortage. The industry will require at least one million workers over the next three years.
The government believes that there is a need to attract larger players and bring in Foreign Direct Investments which will help to develop professionalism in the industry.
The leather industry currently employs about 2.5 million people and is one of the top ten foreign exchange earners of the country.
India's share in the world leather trade of 88 billion stands at about 3 per cent.
''The annual industry turnover is Rs 25,000 crore with Rs 10,000 crore going into the export basket,'' said Mr Gupta.
According to an EXIM Bank study the Indian leather industry is targeting over 5 billion dollar exports by 2010 and is expected to add about additional 1 million direct and indirect jobs during this period.
Technology upgradation and modernisation of the entire leather value chain needs to be given priority. Recently, the government has approved Rs 290 crore for modernisation and technology upgradation programme.