👍👍👍India’s per capita consumption for footwear lowest globally: CLE Chairman Sanjay Leekha – The Hindu BusinessLine

Clipped from: https://www.thehindubusinessline.com/economy/indian-consumption-of-footwear-is-only-two-pairs-per-capita-cle-chairman-sanjay-leekha/article66502792.ece

Domestic market is extremely positive as footwear purchase will increase with rising buying strength

Sanjay Leekha,Chairman, CLE | Photo Credit: VELANKANNI RAJ B

There are many reasons to believe that the $18 billion (domestic and exports) Indian leather footwear industry, is set to grow. One reason is that the on an average, an Indian buys just two pairs of footwear every year. This is one of the lowest in the world. In comparison, people in western countries buy 7 pairs and in China 5 pairs, said Sanjay Leekha, Chairman, Council for Leather Exports. In an interview with businessline, he discussed the domestic market and how India can be an alternative to China in the sector.   

Q

How strong is the domestic market, which is nearly $13 billion out of the total $18 billion? 

It is extremely positive. Currently, the domestic market is a little more than double of the exports but the growth can be really huge with the buying power keeps increasing and consumption will keep increasing. Footwear is a necessity and is also a fashion. When you combine the two, things can multiply. The Indian consumption of footwear is only two pairs per capita. This means the 1.4 billion population consumes only around 2 billion pairs of shoes. This is one of the lowest numbers globally. For this to go from 2 pairs to three pairs is simple and easy. If it happens, imagine the additional number that we will require to feed the domestic market. In China it is over 5 pairs; in the western countries it is 7 pairs. We have a long way to go. 

Q

How can India be an alternative to China in the leather industry? 

Even during pre-Covid, restrictions on Chinese products by the US created an opportunity for Indian product manufacturers as we became more competitive in terms of pricing. However, we were not really fully equipped to handle the additional business that could have come, and that business moved to other countries like Vietnam. However, post- Covid, the opportunity has come up again, because of China today, for various reasons. They don’t want to produce low tag products like footwear as their costs have become very high. They no longer remain competitive in this sector. Our wage costs are manageable, though not the lowest in the world. With these wage costs and the right infrastructure being created, there is a huge potential for additional business to be created in India. 

Q

Is Bangladesh a threat? We lost some business in textile to them. Can we expect a similar trend happening in the leather sector? 

I don’t think so. Bangladesh does have a small leather industry but we are better equipped to take advantage. In raw materials, they are importing a lot. We are importing some and manufacturing locally. 

Q

Which are the emerging destinations that could probably be a threat to India? 

There has been some growth in countries like Cambodia, Laos, and there was a lot of talk on Myanmar but for political reasons people did not invest there. There is also talk of investments happening in Africa but that is a slow process as the infrastructure does not exist there.

Q

By 2030, leather exports will be around $14 billion from around $6 billion expected to be at the end of this fiscal. How is this possible as the industry stagnated in the last few years? 

These are scalable businesses, and increasing capacity is not a major issue. There are capital investments, but they are not out of reach. If the Production Linked Incentive is given in the near future, it will bring in more investment. Nearly 98 per cent of the players in the sector are in the MSME sector. For us to reach the target that we aim for, we need bigger players with bigger numbers. The MSME players will continue to play an important role because it is much easier for an MSME to scale up and double up production. New FDIs coming into the sector will help us in reaching those targets that we have set. Our factories can handle increased production; our institutes like the Footwear Design and Development Institute; the National Institute of Fashion Technology; the National Institute of Design and CFTI are all well placed to provide the skilled manpower that we require to scale up the production.  Hence the target that we have set of reaching $13 billion by 2030 is well thought out and easily achievable with the right support. 

Q

Use of synthetic footwear is growing at a rapid place globally? Is this worrying the traditional leather footwear sector? 

I do not see the two industries as separate. Whether we are making leather or non-leather shoes, it is still a shoe. It is the footwear industry. The new investment that is coming is in the non-leather sector, it is still in the footwear sector. The numbers that we are talking of also takes in to consideration the growth coming from the non-leather sector. The $5 billion also has a small component of non-leather products that we export. 

Q

Europe has always been a strong market for Indian exporters but the US is fast catching up? 

Yes, the US is growing at a fast place. The US as a market for Indian leather products has been extremely low. Our low market share in the US does not justify. China is a dominant supplier of leather products to the US. Most of our players were MSMEs and capacity was limited and not equipped to handle larger orders from the US, and as fresh investments started to happen and increase our capacity, we have no other option but to look at the market that can handle those numbers. The buying trends in the US till four years ago were only in China. However, with President Trump’s tariff, they had to look at other destinations. They got hit due to lack of supply and started looking at India. Now, with the current geo-political situation, they don’t have an option but to look at us. 

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