Fashion footwear demand stokes city leather exports

Mumbai's status as a major leather exporter has got a boost with its share of exports increasing to 7 per cent over the last three years.

In 2003-04, the total value of Indian exports was Rs 9,623.71 crore. Of this, the share of Mumbai-based exporters was Rs 734 crore, which is around 7 per cent of the total exports.

"New trends in fashion have fuelled global demand for embroidered ladies footwear and women's footwear embedded with artificial stones in the last three years. Manufacturers from the city specialise in producing such footwear," says H R Malik, partner, Malik Traders.

Exports of such footwear zoomed from Rs 152.71 crore in 1999-2000 to Rs 371.30 crore in 2003-04. During the same period, exports of finished leather went up from Rs 85.06 crore to Rs 174.69 crore and those of non-leather footwear also increased from Rs 4.77 crore to Rs 11.11 crore.

Around 2002, the city's share in leather exports nose-dived to 4 per cent from 20 per cent 20 years ago. The closing down of few tanneries in the city resulted in a sharp decline in market share, sources say.

Mumbai has been a leather centre with Deonar abattoir being a major source of raw leather. After the closure of the local tanneries, raw leather was going to other parts of the country for conversion into finished leather.

Getting finished leather from other states increased prices by about 12 per cent (4 per cent sales tax, 5.5 per cent octroi and transportation and insurance costs).

"Given the high realty prices, the chances of the industry moving out from the city has been ruled out as of now. Although there are a few tanneries in Aurangabad, the chances of even moving out within the state are remote," says S H A Jamati, regional director, Council for Leather Exports.

"At the insistence of Small Scale Leather Industries Federation, MIDC did build a leather complex at Ambernath. One reason for abandoning the project was that going 65 km away from the city is not good for the industry," he said.

"Still, nothing is clear about the relocation of leather manufacturing units in the Dharavi redevelopment plans," says Jamati.

"The state government has also not taken any action to relocate closed tanneries to Deonar. This after collecting 40 per cent of the land cost from the tanners several years ago," say sources.

The city's high real estate prices is one of the main reasons why the leather industry has not taken off here. "To set up a factory here, one needs much more investment compared with other cities. Infrastructure and labour too are comparatively higher. We are forced to import leather from other states paying high taxes and incurring transport costs. This increases the cost of footwear by about 3 per cent. Mumbai's skilled craftsmen are its only advantage," says Malik.

He said they were considering moving to special economic zones in Navi Mumbai.

Besides merchant exporters, there are about 125 registered regular manufacturer exporters. In the unorganised cottage sector, about 567 units in Dharavi manufacture leather goods and garments.

Over 1,000 units in Thakkar Bapa Colony in Chembur manufacture leather footwear besides a few units in Madanpura, near Byculla. These unorganised units cater to both the export and domestic markets.

Europe and the US are the biggest market for exports.

The Indian leather export industry is flourishing, yet controversial because it employs child labour. "Units in small towns and remote areas use child labour. The West has accepted Chinese leather, which uses prison labour," says Kishore Sippy, managing director, Meridian Trading.

As of now, the council for leather exports in India plans to double its exports from the existing Rs 10,691 crore by 2010.