“Prices will certainly increase by at least 5% wholesale and 3% on average at retail. This decision will also make domestic manufacturers uncompetitive in the global market where we have strongly positioned ourselves, ”said Dilip Kapur, Founder and President of Pondicherry-based premium leather goods manufacturer Hidesign.
Kapur said the industry has asked the government to allow import of raw materials duty-free and tax imports of finished products. “This will encourage the manufacturer of labor-intensive finished products, as it will make products made in India competitive, both domestically and for export,” he said.
The basic 10 percent tariff was imposed on wet blue chrome tanned leather, split leather, finished leather of all kinds, including splits and zero-duty sides. The exact amount of the price increase will need to be calculated as it will be necessary to see if the markets can absorb it, industry executives said.
The executive director and CEO of UK shoe maker and retailer Clarks’s India, N Mohan, said the new requirement could drive up costs, especially for high-end brands that import semi-finished and finished leathers.
However, it will also put pressure on improving productivity and other efficiencies. While we welcome the intention to be self-sufficient, we need to work with manufacturers to ensure that overall efficiencies increase and that this cost is mitigated, “he said. noted.
India depended on imported leather from South America, New Zealand, Brazil and Africa, renowned for its quality and workmanship.
“Over the years, European and American buyers have guided us in purchasing leather. The demand for these high-end shoes, handbags and clothing in the domestic market has also started to increase. With leather making up 50% of the raw material of shoes and bags, prices will increase by more than 5%, ”said Mukhtarul Amin, group chairman and general manager of Kanpur-based Superhouse Group, which sells in the domestic market. under the Allen Cooper brand and also. manufactures leather products for German luxury fashion house Hugo Boss and American Michael Kors.
India exports leather products worth $ 5 billion annually and imports raw and finished leather worth $ 0.5 billion. Footwear exports account for 51.77% of the shares from April 2019 to March 2020 with a value of $ 2.6 billion. India’s raw material resources are insufficient and hence import duties will hamper exports of finished products from India, said Sanjay Leekha, vice president of the Council for Leather Exports. . He added that the prices of finished products will also increase slightly.
India is the world’s second-largest exporter of leather garments and the world’s fifth-largest exporter of leather goods and accessories. Companies could begin to consider other categories of manufacturing non-leather footwear for export, Mohan said. “The world is watching India as we specialize in leather shoes. We have to look for ways to be competitive, ”he said.
The industry is also asking the government to announce production and employment related incentives for footwear and leather products, as it is one of the main employment sectors in the world. According to Invest India, the leather industry tends to generate 250 jobs for every $ 0.2 million investment.
“We may soon see Chinese products flooding the Indian market since finished leather products attract only 15% import duty,” Kapur said.