Agra leather units look to Ethiopia

The leather industry of the country is facing one of its toughest times this year. According to the latest industry figures, the production has dipped by 9 per cent in the fiscal year 2007-08 due to several reasons including the 12 per cent appreciation of the Indian rupee against the US dollar.

As a result, the leather sector is not likely to reach its projected growth target of 15 per cent, hovering at around 7 per cent this year.

Already facing a stiff shortage of skilled manpower and rising production overheads of leather goods in Agra, the local footwear industrialists now appear to be keen on establishing leather tanning and other associated industries in Ethiopia, which has recently emerged as a potent source for quality leather owing to a large population of cattle in the country.

A delegation of the National Chamber of Industries and Commerce, UP (NCIC), and the Agra Footwear Manufacturers and Exporters Chamber (AFMEC) is expected to leave for Ethiopia next month to probe different business prospects offered by the Ethiopian government in the leather sector, especially tanneries, which have been shut down in Agra due to pollution concerns.

Following up on the Ethiopian government's offer for business opportunities in the agro, leather and mining sectors, Ethiopian ambassador Janet Jewide held a joint meeting with the NCIC and AFMEC in Agra on Monday and discussed the possibilities of attracting investment from the Agra industrialists into Ethiopia.

Talking to Business Standard after the meeting, Lalit Arora, director, Leather Linkers Ltd, said the Ethiopian government had laid out several lucrative proposals before the local industrialists which included allotment of free land in Ethiopia for setting up the industrial units with a 90 year lease on the allotment.

He said that the leather tanning industry had bright prospects of prospering in Ethiopia where the cattle were of high breeds and the leather was of finer quality than what was ordinarily available in India.

Besides, he said, capital investment in the leather industry would be funded by the Ethiopian banks which were offering to finance upto 70 per cent of the venture capital needed in setting up the units at a nominal interest rate of 7.5 to 9 per cent.

Apart from leather tanneries, Arora said, manufacture of leather goods in Ethiopia was another scenario being studied by the local footwear industry which was facing a crisis of rising production overheads due to high raw-material costs and shortage of skilled labour.

Though it was still early to comment on the business potential of the Ethiopian ventures, he said, a clearer picture will emerge after a delegation of the NCIC and AFMEC visited the country next month.