Indian Leather Industry: projected to reach $ 10.3 Billion by 2026
The Indian leather industry plays a significantly contributes to the country’s economy, renowned for its robust export performance and significant contribution to foreign exchange earnings.
As one of the top ten foreign exchange earners, this sector encompasses leather, leather products, and footwear, reflecting India’s rich resources and skilled workforce.
Overview of the Indian Leather Industry
India is blessed with an abundance of raw materials; it accounts for approximately 20% of the world’s sources of Nappa leather. This wealth of resources positions India as a leading player in the leather sector. The industry is not only rich in raw materials but also benefits from a skilled labor force and innovative technologies. Furthermore, there is a growing compliance with international environmental standards, which enhances the industry’s reputation on a global scale.
The leather sector is employment-intensive, providing jobs to around 4.42 million people, predominantly from weaker sections of society. Notably, women constitute about 30% of the workforce in the leather products segment, highlighting the industry’s role in promoting gender inclusivity. Additionally, the Indian leather market was valued at USD 6.8 Billion in 2020 and is projected to reach USD 10.3 Billion by 2026, growing at a CAGR (Compound Annual Growth Rate,) of 7.6% during the forecast period 2021-2026.
Export Performance
In terms of export performance, the Indian leather industry has remained strong and adaptable despite facing various challenges. During the fiscal year 2020-21, exports of footwear, leather, and leather products reached approximately USD 3.68 billion.
However, recent trends indicate fluctuations in export values due to various factors. For instance, exports fell by nearly 10% in the fiscal year ending March 2024 compared to the previous year, totaling around USD 4.28 billion. This decline was attributed to weak demand from major markets such as the United States and Europe.
The state of Tamil Nadu stands out as the largest exporter of leather products in India but recorded an 18% decline year-over-year in fiscal year 2024. In contrast, Uttar Pradesh saw a marginal increase in its export share, showcasing regional disparities within the industry.
Despite these setbacks, there are positive signs for recovery. Recent investments in southern India, particularly in sports footwear production by major Taiwanese companies indicate a renewed interest in expanding manufacturing capabilities. This investment is expected to boost exports and strengthen India’s position as a key player in the global leather market.
Future Prospects
Looking ahead, the prospects for the Indian leather industry appear promising. With a projected market value expected to reach USD 10.3 billion by 2026, there is significant potential for growth driven by both domestic consumption and international demand. The increasing popularity of sustainable and ethically produced goods presents an opportunity for Indian manufacturers to align with global trends.
Moreover, as global consumers become more conscious about sustainability and ethical sourcing, Indian leather producers can leverage their compliance with international environmental standards to capture new markets. The industry’s focus on innovation and technology will also play a critical role in enhancing product quality and meeting evolving consumer preferences.
Market Drivers and Challenges
Market Drivers:
- Increasing Demand for Leather Goods: Rising disposable income levels among consumers, coupled with changing fashion trends, have propelled demand for leather-based goods globally. Numerous initiatives by local and regional government authorities encouraging production and sales of leather goods will further fuel market growth.
- Frontier Trade Link’s Initiatives: Frontier Trade Link has taken a significant step by joining the mission to boost exports. Their initiative focuses on connecting rural businesses with global markets, providing them with the necessary tools and resources to thrive. By partnering with Frontier Trade Link, businesses can tap into new markets and contribute to India’s economic growth.
- Saddlery Demand: India is the third largest exporter of saddlery and harness in the world. With global players looking for new sourcing options, the Indian saddlery sector stands to gain a larger share of the global market. This growing demand for saddlery products presents a significant opportunity for Indian manufacturers to expand their export capabilities.
- Growing Footwear Industry: The footwear industry has seen tremendous growth over the past decade due to increased consumer spending on shoes across various regions worldwide. This trend is likely to continue driving demand for high-quality and fashionable footwear made from luxurious materials such as suede and calfskin leathers.
Market Challenges:
- High Prices of Raw Materials:
- Challenge: The cost of raw materials used in the production process can be quite high, affecting profitability margins and reducing revenue opportunities for companies operating within the space.
- How Frontier Trade Link Helps: Frontier Trade Link can facilitate bulk purchasing and supply chain optimization, helping businesses secure raw materials at more competitive prices, thus reducing costs and improving margins.
- Fluctuations in Export Demand:
- Challenge: Export values can fluctuate due to various factors, including economic conditions in major markets like the United States and Europe.
- How Frontier Trade Link Helps: By connecting businesses with a diverse range of global markets, Frontier Trade Link can help mitigate the risk of demand fluctuations in any single market. This diversified approach ensures a more stable and consistent demand for Indian leather products.
- Compliance with Environmental Standards:
- Challenge: Increasing global emphasis on sustainability and ethical sourcing requires compliance with international environmental standards, which can be challenging for some manufacturers.
- How Frontier Trade Link Helps: Frontier Trade Link can provide guidance and support in meeting international environmental standards. By helping businesses adopt sustainable practices, they can improve their global reputation and attract environmentally conscious consumers.
- Access to Global Markets:
- Challenge: Many rural businesses struggle to access global markets due to a lack of resources and connections.
- How Frontier Trade Link Helps: Frontier Trade Link focuses on connecting rural businesses with global markets, providing them with the necessary tools and resources to thrive. This includes market research, logistics support, and marketing assistance to help businesses tap into new markets and expand their reach.
Conclusion
In conclusion, the Indian leather industry shows India’s resource richness and skilled labor force. Despite facing challenges, the sector has shown strength and continues to be a major part of the economy. With a focus on sustainable practices, innovative technologies, and quality improvement, the future of the Indian leather industry looks bright. As global demand for ethically produced leather goods increases, India is well-positioned to take advantage of new opportunities and achieve significant growth in the coming years.
Additionally, initiatives like those by Frontier Trade Link, which connect rural businesses with global markets, and the growing demand for saddlery products will play crucial roles in driving this growth and enhancing the industry’s global presence.
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