Strong rupee hurts leather exports

With the rupee strengthening against the dollar, exports of leather and leather products from India are facing a severe crisis. The footwear industry, located in Agra and Chennai, is expected to be the worst hit.

"The just concluded Expo RivaShuch Fair is an example of the deteriorating condition of our exports," said Mukhtarhul Amin, chairman, Council for Leather Exports.

In the recently concluded Expo RivaShuch fair in Garda, Italy, contrary to the past, India did well. The fair used to be popular among the Indian footwear manufacturers, as buyers from all over the world came there to shop. This is also the platform where the Indian exporters put forward their creations for the next season.

In comparison to last year when about 84 leather exporters participated only 70 exporters participated this year. Also as against ¤1.85 million spot orders booked in June last year, the spot orders booked this year did not even cross half the mark, said Amin.

"We have seen over 50 per cent decrease in our orders," he added.

Amin said though there were tremendous enquiries from buyers, the price offered by them in the wake of appreciating rupee had prevented the orders from being confirmed.

With an appreciation of more than 10 per cent in the recent past, the price offered by overseas buyers does not even cover the cost of the product and as such, whole exercise is a loss-making activity.

The present situation has made leather exports a losing business and has threatened the very existence of small- and medium-seized enterprises which form the bulk of exporting units in Indian leather exporting community.

About 90 per cent of the exporting units are in the micro and medium sized sector, contributing 46.71 per cent of exports. These units operate on thin profits.

Earlier, the Council for Leather Exports had met the Union Finance Minister and Union Commerce and Industry Minister and handed over a memorandum seeking foreign exchange fluctuation allowance at 6.22 per cent of the FOB price.

"However, no decision in this regard has been taken by the government yet," said Amin. He stated that, the average appreciation of 6.22 per cent was worked out after factoring in the import intensity of the sector, which is at 14 per cent of the turnover.

Besides this the Union Commerce Secretary also visited Kanpur last week to discuss the matter with the industrialists there. Kanpur is the hub of leather industry in India.

"We were given assurance, but nothing substantial have happened so far," said Amin.

"The present situation of appreciating Rupee has turned out to be China's gain," said Amin, adding that once India loses business to China, it would be impossible for it to get it back and the exports from India would dwindle leading to loss of employment.