Export of Leather Products

Introduction

Indian leather sector is large, estimated at around USD 17.85 billion, with exports accounting for 30 per cent of its value. Indian leather exports which stood at 5.6 billion USD[1] (INR 38,468.7 Cr[2]) in FY 17 are expected to increase to USD 9 billion by 2020[3]. Our key export destinations include USA, Germany, UK and Spain. The USA market, which has been mainly served by China so far, has opened up to Indian exports as the increasing cost of production in China has given us an opportunity to increase the market share in US[4]

Leather exports from India comprise raw hides and skins, finished Leather, leather goods, and garments, footwear and components and saddlery and harness. The export of leather & leather products for the past 5 years is shown below in Chart 1.

Chart No. 1: Export of leather and leather products from India during 2012-17

The top four destinations for Indian leather products include USA, Germany, UK & Italy, which together have a share of 45% of our total exports. The exports which has peaked in 2014-15, have somewhat declined over the past 2 years, due to a slowdown in European economy.

Footwear (leather & non-leather) and footwear components account for the lion’s share of our exports, followed by leather goods & accessories. The product wise and country wise break up of exports is available in chart number 2 and 3.

Chart No. 2: Leather products exports from India

Chart No. 3: Leather products major export destinations

How to reach/expand in the international market

Since exports account for 30% of the total leather & leather products produced in India, there are a good numbers of Indian companies that are already exporting their goods. These companies are looking to expand their customer base. Further, there are several others that are planning to have their footprints in the international market.  The process of entering a foreign market comprises following steps.

Select the market

The selection of markets will be based upon the market size of the target country, competitiveness compared to other suppliers etc.The data on export markets for various products is depicted in Table 1.

Table No. 1 : Major export markets for leather & leather products during 2016 – 2017

Table No. 1 : Major export markets for Leather & Leather products
Chapter CodeProduct DescriptionCountry% share in India’s Exports (2016-2017)
41Raw Hides & Skins (Other than furskins) and LeatherHong Kong26.07%
Italy12.54%
China12.32%
Vietnam10.28%
Korea5.51%
42Articles of Leather, Saddlery & Harness; Travel Goods, Handbags and similar articles of animal gut (other than silk worm)USA20.08%
Germany14.99%
UK10.33%
Spain8.22%
France6.10%
43Furskins and Artificial Fur, manufactures thereofUSA27.22%
UAE11.74%
France9.95%
Germany7.95%
Denmark6.42%
64Footwear, Gaiters and the like; Parts of such articlesUSA16.48%
UK14.79%
Germany11.58%
France5.64%
Italy5.05%
Source : Dept. of commerce – Export Import Data Bank
Select the Sales Channel

Trade fairs remain the most popular channel to access foreign markets. However, there are a number of other channels that can also be used.

  1. Trade Fairs : Trade fairs are conducted to bring together members of particular industry to showcase and demonstrate their latest products and services, meet with industry partners & customers and explore opportunities. The upcoming leather fairs are : “India International Leather Fair – Chennai 2018”, International leather fair in Italy – “Lineapelle” etc.
  1. Challenge : Attending trade fairs in foreign countries can be very expensive.
  1. Buying Houses/Agents (Sales Rep’s) : These are the people who buy products on behalf of the customer (store, or brand) and can act as a bridge between the manufacturers & sellers/consumers.
  1. Pros : The manufacturer can concentrate on their core business and the agent takes up the remaining tasks, the cost of acquiring the customers is low.
  2. Cons : you have to invest time in doing the due diligence of the agent
  1. Partnering with Designers : It is one of the best ways to increase the footprints in the international market.
  1. Pros : Since leather products change with fashion, designers are able to help you understand the local requirements
  2. Cons : Finding suitable designer can be very challenging
  1. Direct selling to Retail Chain & Departmental Stores : Stores such as Urban Outfitters, Anthropologie, Crate & Barrel, Habitat, Hallmark, Chicos, TESCO and The Conran Shop, procure leather goods from India.
  1. Pros : Volume of business is high, easy access to vast group of customers.
  2. Cons : Huge competition from other suppliers.
  1. Setting up a sales office in the export market : Opening a store in the export market.
  1. Pros : allows you to build customer relationship and brand value.
  2. Cons : Cost of setting up store is high
Obtain required Certifications

In the international market, buyers look for assurance about the product quality and practices used in product development. Some of the certifications are listed below in table no.2

Table No. 2: Certifications& Description
CertificationDescription
REACH ComplianceRegistration, Evaluation, Authorization and Restriction of Chemicals (REACH) is a European Union regulation that addresses the production and use of chemical substances, and their potential impacts on both human health and the environment.One of the major elements of the REACH regulation is the requirement to communicate information on chemicals up and down the supply chain. This ensures that manufacturers, importers, and also their customers are aware of information relating to health and safety of the products supplied.
SA 8000This is an auditable certification standard that encourages organizations to develop, maintain, and apply socially acceptable practices in the workplace. It measures the performance of companies in eight areas important to social accountability in the workplace: child labor, forced labor, health and safety, free association and collective bargaining, discrimination, disciplinary practices, working hours and compensation
ISOA family of standards related to quality, occupational health and safety, environmental standards, labour standards etc
Avail of Export Promotion Schemes by the Govt.

The government has developed schemes to reduce associated costs in reaching the international markets. Some of the schemes are listed in table no.3.

Table No. 3: The schemes from the GOI to promote exports
SchemeDescription
Market Access Initiative (MAI)Financial assistance is provided for export promotion activities to Export promotion councils, Industry & Trade Associations, etc.
Marketing Development Assistance (MDA)Financial assistance is available for exporters having an annual export turnover up to Rs. 30 Cr for participating in trade fairs, buyer seller meets organized by EPC’s/ Trade promotion organizations.
Indian Footwear, Leather & Accessories Development Programme (IFLADP) for 2017-20Provides international branding support to leading Indian manufacturers in Leather, Footwear and accessories, available to companies with annual turnover of over Rs. 75 crores

How can we Help?

If you are interested in expanding your businesses of leather & leather products to the international market, we can assist you in the following

  • Identifying potential markets for your products
  • Viability study for entering a particular market
  • Assistance in generating a list of potential buyers and in scheduling meetings
  • Assistance in connecting to designers and sales representatives who can sell your products in their country

[1] Council for Leather Exports (CLE)

[2] 1 USD = INR 67.90

[3] www.makeinIndia.com

[4] Indian leather units see opportunity in exports to US, other markets – Article by  Business Standard

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