Hit by tariffs on products imported from China, US companies have begun shopping in India.
\n\u201cUS importers are panicking,\u201d said Mecca Rafeeque Ahmed, a leading exporter and founder of the Farida group, a Chennai-based exporter of footwear.
\n\u201cThere is one US company which is looking to buy 50 million pairs of footwear,\u201d said Ahmed, and added that India is short of capacity.
\n\u201cThe entire country exports 135 million pairs,\u201d he said (The Council for Leather Exports puts the export figures at 115 million pairs.)
\nFootwear is not yet in the list of Chinese goods on which the US has slapped a tariff of 10 per cent, which could rise to 25 per cent on January 1, 2019.
\nOther goods, such as handbags and wallets, are in the list, but industry insiders such as P R Aqeel Ahmed, the Vice Chairman of the Council for Leather Exports, said that it is only a matter of time before President Trump tariffs leather footwear as well.
\nAqeel Ahmed said that the industry is receiving more overtures from US companies for buying leather products. \u201cWe have to grab this opportunity,\u201d he said.
\nThe leather industry
\nThe industry has prepared a roadmap to raise exports from $5.6 billion to $10 billion by 2021-22; the US-China trade war has come in handy for meeting the target.
\nAccording to Rafeeque Ahmed, in the footwear sub-sector, capacity is an issue, as the industry has to cater to a large domestic market. Data by the Council for Leather Exports (in December 2017) shows that the industry makes 2,065 million pairs, of which 1,950 million pairs are sold in the domestic market. This sub-sector accounts for half of India\u2019s leather exports.
\nThe leather garment sub-sector produces 16 million pieces a year and accounts for one-tenth of the exports. Other products such as articles (wallets, handbags), industrial gloves, harness, and saddlery account for a quarter of exports. The industry\u2014 domestic and exports, is estimated to produce $18 billion worth of products. It also employs 4.5 million people. The Indian government came up with a \u20b92,600 crore \u2018special package\u2019 for the industry\u2014 the funds would be spent over three years between 2017 and 2020.
\nThe challenge
\nWhile Rafeeque Ahmed said that capacity could be a constraint in the footwear sub-sector, Aqeel Ahmed is confident that the industry would rise up to the demand. However, both of them said that other countries are moving in fast; unless India is agile, this big opportunity would be lost.
\nVietnam has been aggressive, even before the US slapped tariffs on China. The country has been taking advantage of increasing production costs in China. While India aims at a target of $10 billion for the leather exports, Vietnam\u2019s footwear exports alone in the first nine months of the current year came to $ 11.8 billion\u2014 10.5 per cent higher than the same period last year. Cambodia too recorded a double-digit growth in the first nine months, exporting $4 billion.
\nAqeel Ahmed said that Vietnam may have maxed out on its footwear capacity, and buyers would look towards India. The industry is seeking the government\u2019s support to ramp up capacities.
\nRafeeque Ahmed also said that Chinese companies are looking to join hands with Indian companies to put up factories in India, to export to the US from.
\nSource: The Hindu, Business Line (Published on 30th October 2018)<\/p>\n
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