Está en la página 1de 10

International Journal of Business

Management & Research (IJBMR)


ISSN(P): 2249-6920; ISSN(E): 2249-8036
Vol. 4, Issue 4, Aug 2014, 23-32
TJPRC Pvt. Ltd.

A STUDY OF EXPORT POTENTIEAL OF LEATHER & LEATHER PRODUCTS FROM


INDIA TO U.K. & U.S.A
KALPANA AGRAWAL1 & ABHISHEK GOKHARU2
1

Assistant Professor, Prestige Institute of Management & Research, Indore, Madhya Pradesh, India
2

Research Scholar, Prestige Institute of Management & Research, Indore, Madhya Pradesh, India

ABSTRACT
India has vast potential for growth of exports in various sectors. Indias leather export for leather and leather
products has grown at a fast pace in the past decade. It also captures a place of fame in the Indian Economy in view of its
immense potential for employment, growth and exports. The purpose of this research is to determine the export potential of
Leather and Leather Products. There has been an increasing significance on its planned development, aimed at ideal
utilization of available raw materials for maximizing the returns, particularly from exports. The exports of leather and
leather products gained impetus during the past two decades. The industry consists of firms in all capacities, including
small artisans to major global players.
The study also highlights the major export destinations of Indian Leather and Leather Products. The information
for the research enquiry has been collected from secondary sources. The presentation of the export figures of Leather and
Leather Products has been depicted in the form of tables. The present study also provides some perspectives of the industry
as apparent in India.

KEYWORDS: Leather Products, Major Export Destinations, Indian Economy


INTRODUCTION
Among the various constituents of the manufacturing sector in India, Leather sector is one of the important
sectors, mainly due to its contribution in the direction of employment. It is one of the solitary sectors which have the
advantage of the both value addition and export potential. Leather Industry contributes significantly to total manufacturing
output and exports from the country.
Leather Industry has been one of the customary industries performing in India and is indispensably located in
determined states. Leather industry has vast potential for employment, output growth and exports. It is one of the top Eight
foreign exchange earners worth over Rs. 10000 crores per annum and accounts for 3% of the global leather-related trade of
Rs. 387200 crores. An approximate 15% of total purchase of influential global brands in footwear, garments, leather goods
& accessories in UK & USA, and 10 percent of global supply is outsourced from India. Leather industry has undergone
theatric transformation in the recent years from a mere exporter of raw materials in the sixties to that of value added
finished products in the nineties.
The Indian leather industry comprises of both organized and unorganized sectors. The organized manufacturing
sector broadly consists of tanning and dressing of leather manufacture of luggage, handbags saddlery, harness and
footwear. Currently unorganized sector plays a commanding role in the complete production. The small scale, cottage and
www.tjprc.org

editor@tjprc.org

24

Kalpana Agrawal & Abhishek Gokharu

artisan sectors account for over 75 per cent of the total production and majority of them bound to unorganized sector.
Though footwear is produced by both large and small scale sector, the small scale sector has almost 90 per cent portion in
the total production of footwear in India.
Indias leather and leather products exports have been flourishing at 6.80% per annum during FY 1991-92 to FY
2007-08. Major export target markets are UK, USA, Germany, Italy and Hong Kong. Indias exports of finished leather
have been increasing at the rate of 6.42% during FY 1993-94 to FY 2007-08.

REVIEW OF LITERATURE
The Leather Industry in India has vast potential for further growth, both in the domestic market and in the export
arena and can create additional employment opportunities for about 1 million people in the next 5 years. However, in order
to achieve this growth, the sector has to go in for extensive capacity expansion. There is a need to enhance the scale of
production and capacity of the Indian leather In order to meet the requirements of the bulk procurers and to compete in the
international market. Considering the limitations of space in the existing clusters, there is a need to develop new mega
Leather Clusters in the states where there is a major presence of the leather industry and also in states that offer very good
potential for development of the leather industry. Such Mega Leather Clusters should be located on/near the National/State
Highways and should have world-class infrastructure and very good connectivity with the port (Guidelines Leather
Scheme 21 March 2012).
Export growth in India has much faster than GDP growth over the past few decades (Kishore Sharma 2012).
Indian leather industry has massive potential for generating employment and achieving high export-oriented
growth. However, the on-going Global economic slowdown and the wide erratic behavior of the overall A Study on the
Export Potential of Leather from India weather condition particularly in the Europe pose both threat (of market loss) and
opportunity (to gain some unanticipated demand in the market) before it. On the other hand, its economic performance has
not been assessed much till date (Anup Kumar Bhandari, March 2010).
India has largest number of livestocks, an abundant supply of cheap and skilled labor and an ever-increasing
demand for leather goods. In spite of all these factors the Indian leather goods industry has barely 2.5% of the global
market share (Anamika Singh, 2003).
The Indian leather industry is predominantly concentrated in the MSME segment and is operating on low profit
margins on account of fierce competition in the international market. Considering the low risk-taking capacity of the
existing entrepreneurs, it may be difficult to attract investments in large quantities unless the Govt. also participates in the
creation of infrastructure in a big way. The concept of Mega Leather Clusters seeks to address the constraint of large
infrastructure with integrated production chains in the country (Guidelines Leather Scheme 21 March 2012).
The past years Foreign Trade Policy identified leather and leather products as a thrust sector for export promotion
because of its significant export prospects coupled with employment generation. The policy goal is to double the share in
the world export by 2008-09. With the Indian share in the global exports at 2.5 percent in 2003-04 and the world export
growing at a CAGR of 4.0 percent, to achieve the 5 percent share in world export in 2008-09, our export must grow at a
CAGR of 19.3 percent. The share of domestic sales in the value of leather production in 2003-04 is estimated at 43 percent.
If we assume a CAGR in the domestic demand of 6.0 percent, then the value of production in 2008-09 must be 91.2

Impact Factor (JCC): 4.9926

Index Copernicus Value (ICV): 3.0

A Study of Export Potentieal of Leather & Leather Products from India to U.K. & U.S.A

25

percent (Growth prospects for exports of Indian Leather and Leather Products: What needs to be done? 2004). In 2004-05,
the industry recorded a satisfactory 5.8 percent export growth to reach a level of US$ 2.3 billion. Although, leather exports
have increased in absolute terms, its share in total exports have declined in percentage terms from a high of 7.99 percent in
1990-91 to 2.89 percent in 2004-05(EXIM bank, 2006).
The scope for export of Indian leather products especially leather goods, leather garments, saddler and harness is
pretty good as there is no significant manufacturing base.
Tanneries can tie up for regular supply of cow dies or setting up tanneries for processing of leather upto wet blue
stage for finishing in India (Council for leather export 2007).
The leather industry occupies a place of prominence in the Indian economy in view of its massive potential full
employment, growth and exports (Anup Kumar Bhandari, March 2010).
The structure of the Indian leather industry is quite interesting. It is spread in different segments namely tanning
and finishing, footwear components, leather garments, leather goods including saddlers and harness etc.
(Anup Kumar Bhandari 2010).
Indias role in world trade and Indias export performance have been relatively neglected areas in recent research.
Even less well understood is the performance of large Indian firms and their role in overseas markets
(Abhijit Sharma and Michael Dietrich May 2004).
There is enormous scope for increasing the export of branded leather goods and garments to Japan as the
consumers are taken keen to procure branded products. The Japanese market offers great scope for export of middle price
ranges of shoes, garments and other accessories because higher and lower segment are met by Italy & China respectively.
Supply of quality branded products backed with consistent marketing efforts would go long away in capturing a substantial
market in Japan. (Council of leather exports, Dec 2011).
Indias leather footwear industry is growing at modest rate in the last one decade. The output growth in between
1998-99 and 2006-07 has been 5.92%/Annum (based on intersect oral transaction matrix of India).
In the last few years 2003-07 the growth output has accelerated to 7.31%. The value of output of leather footwear
is estimated at Rs. 1289 Cr. in 2006-07. The footwear constitutes substantial proportion of leather industry and its share in
leather industry is continuously going up. India currently produces 2065mn pairs of footwear, 100mn pairs of leather shoe
uppers and 1065 pairs of non-leather footwear. It shoes more than half of footwear that is produced in India are non-leather
based. In global scenario India is the 5th second largest producer of footwear accounting for 14% of global footwear
production only after China who produces 64% of global footwear (Khan 2009).

RATIONALE OF THE STUDY


The study aimed at identifying the export trade of Leather and Leather Products. We will try to give certain
suggestions for the growth of this industry. Along with it we will try to give certain suggestions for the growth of this
industry. Along it we will discuss about the rules and regulations of the exporting countries of the Leather and Leather
Products items, as in this reference it is India. In forecasting the demand and extrapolating the trend for the years to come
and in determining the existing trend of the product. Also it will develop suggestions for Indian exporters to improve upon
exports.
www.tjprc.org

editor@tjprc.org

26

Kalpana Agrawal & Abhishek Gokharu

OBJECTIVES

To familiarize with the leather industry, production, export history of this particular industry.

To find out the history of leather industry in export sector.

To study about the Export Performance of leather and leather products in India for the Year (2008-09 to 2012-13).

To find out the future Export Performance of leather and leather products in India for the Year (2013-2014 to
2017-2018).

METHODOLOGY
The Study
This study is an attempt to explore the export potential of Indian leather.
The Sample
For the study secondary data of export of leather and leather products have been used for the year 2008-2013.
The Tool

Data collection
The present research is secondary data based; data available on the government sites of export of leather and

leather products were taken for the year 2008-2013.

b) Tools and techniques for data analysis


Trend analysis has been used to analyze the secondary data collected for analysis is based on the idea that what

has happened in the past, looking at past trend an idea of what will happen in future has been analyzed.
Exponential Smoothing Model
Exponential smoothing is a technique that can be applied to time series data, either to produce smoothed data for
presentation, or to make forecasts. The time series data themselves are a sequence of observations. The observed
phenomenon may be an essentially random process, or it may be an orderly, but noisy, process. Whereas in the simple
moving average the past observations are weighted equally, exponential smoothing assigns exponentially decreasing
weights over time.
Exponential smoothing is commonly applied to financial market and economic data, but it can be used with any
discrete set of repeated measurements. The raw data sequence is often represented by {xt}, and the output of the
exponential smoothing algorithm is commonly written as {st}, which may be regarded as a best estimate of what the next
value of x will be. When the sequence of observations begins at time t = 0, the simplest form of exponential smoothing is
given by the formulae:
S0 = X0
St = Xt-1 + (1-) St-1 , t > 0
Where is the smoothing factor, and 0 < < 1.
Impact Factor (JCC): 4.9926

Index Copernicus Value (ICV): 3.0

A Study of Export Potentieal of Leather & Leather Products from India to U.K. & U.S.A

27

RESULTS
Trend Analysis
Table: 1 Export Potential of Footwear with Outer Soles of Rubber Plastics to UK
Year
2008-09

Export
217.93

2009-10

266.98

2010-11
301.9
2011-12
318.38
2012-13
353.45
2013-14
2014-15
2015-16
2016-17
2017-18
(Value in US million $)

Trend Value

388.46
420.704
452.948
485.192
517.436

Graph: 1

DISCUSSIONS
The above trend value shows that Indian Footwear with outer soles of rubber plastics is increasing and there is
a huge growth in the future market. This shows that 137.433% increase in growth rate of export value. So it can be said
that there is a huge opportunity in the world market for Footwear with outer soles of rubber plastics. This is because the
Government of India has permitted 100 percent FDI through the automatic route for the footwear sector.
Table 2: Export Potential of Trunks & Cases to UK
Year
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18

Export
149.02
139.68
158.07
170.85
181.33

Trend Value

188.527
198.106
207.685
217.264
226.843

(Value in US million $)

www.tjprc.org

editor@tjprc.org

28

Kalpana Agrawal & Abhishek Gokharu

Graph: 2

DISCUSSIONS
The above trend value shows continuous increase in growth rate of export value by 52.224%. Thus it can be said
that there is galloping opportunity for Trunks and Cases in UK.
Table: 3: Export Potential of Articles of Apparel & Clothing Accessories of Leather to UK
Year

Export

2008-09
39.45
2009-10
34.04
2010-11
30.48
2011-12
40.25
2012-13
45.73
2013-14
2014-15
2015-16
2016-17
2017-18
(Value in US million $)

Trend
Value

43.621
45.498
47.375
49.252
51.129

Graph: 3

DISCUSSIONS
As per the above graph, export value of Articles of Apparel & Clothing Accessories of Leather started declining
from 2009-10 and further declined during 2011-12. But a recovery was observed in export of Articles of Apparel
& Clothing Accessories of Leather from the year 2011-12 which further rose like anything during 2012-13. It can also be
said that there was a continuous rise in growth rate of export by value of 29.605%. This was all because of encouragement
given by Government to this sector.
Impact Factor (JCC): 4.9926

Index Copernicus Value (ICV): 3.0

29

A Study of Export Potentieal of Leather & Leather Products from India to U.K. & U.S.A

Table 4: Export Potential of Footwear with Outer Soles of Rubber Plastics to USA
Year
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
(Value in US million $)

Export
145.66
116.86
135.2
163.77
197.34

Trend Value

196.847
211.874
226.901
241.928
256.955

Graph: 4

DISCUSSIONS
USA has emerged as a key for international trade to India with the increase in export, and especially for the
growth of the potential market for Footwear with outer soles of rubber plastics. This also shows the growth of export value
by 76.408%. The industry also has inherent strengths and growth prospects, the footwear industry aims to augment
production, thereby enhancing its export from current level. This is because the Government of India has permitted 100
percent FDI through the automatic route for the footwear sector.
Table: 5: Export Potential of Trunks & Cases to USA
Year

Export

2008-09
133.91
2009-10
127.27
2010-11
150.03
2011-12
187.94
2012-13
199.76
2013-14
2014-15
2015-16
2016-17
2017-18
(Value in US million $)

www.tjprc.org

Trend
Value

217.493
236.73
255.967
275.204
294.441

editor@tjprc.org

30

Kalpana Agrawal & Abhishek Gokharu

Graph: 5

DISCUSSIONS
With the availability of quality raw materials coupled with skilled craftsmanship, India is now poised to make
itself a major destination for global sourcing of Leather Trunks and Cases. The industrys accelerated development and
growth is being aided by the ambitious capacity expansion and modernized plans of private industries and the
Governments encouragement policy measures boosted growth rate of export value by 119.878%.
Table: 6: Export Potential of Articles of Apparel & Clothing Accessories of Leather to USA
Year

Export

2008-09
74.48
2009-10
50.25
2010-11
60.92
2011-12
78.81
2012-13
106.66
2013-14
2014-15
2015-16
2016-17
2017-18
(Value in US million $)

Trend
Value

102.1
111.392
120.684
129.976
139.268

Graph: 6

DISCUSSIONS
The Leather Industry for Apparel & Clothing Accessories forms a significant segment. It can be seen that there is
an increase in the value of exports after 2009-10, this is because of the encouragement provided by Govt. institute in the
field of trained personnel and imaginative designers.

Impact Factor (JCC): 4.9926

Index Copernicus Value (ICV): 3.0

A Study of Export Potentieal of Leather & Leather Products from India to U.K. & U.S.A

31

This also acknowledged the strengths of the industries in there sector. It can also be seen that there is an increase
in growth rate of export value by 86.988%. Hence, it can be said that, there are wider opportunities for the exports of
Apparel & Clothing Accessories.

CONCLUSIONS
India is second largest exporters of leather footwear, third largest exporters of leather apparels and fifth largest
exporters of Leather Goods & Accessories. The result of the study showed that there is a high potential for growth of
Leather & Leather Products in the coming years, which will definitely continue to boost. The Leather Industry aims at
encouraging production, thereby enhancing its export from current level. Hence, looking at the global trade and domestic
demand it may be said that the Indian Leather Industry has the potential to grow leaps and bounds in the future years to
come. Accordingly, the Government is also implementing various Special Focus Initiatives under the Foreign Trade
Policy for the growth of leather sector. Leather Industry has enormous potential for offering huge employment
opportunities i.e. the leather industry is an employment intensive sector, providing job to about 2.5 million people, mostly
to the weaker sections of the society. And that is why the Indian Government has exempted basic custom duty from
Machinery & Equipments for influent treatment plants.

IMPLICATIONS
The Study would have implication for the following groups:
For Exporters from India
This study will help them to find out export potential from India. It will also help them to know the current
situation of export of Leather and Leather Products.
For Researchers
The researchers can further carry out studies to understand export industries.
For Government
This research is helpful to Government bodies as it would help them identify this sector in which exporters should
be given some incentives so that the export can be increased.
For Students
This study is also useful for the students who want to explore their business in this field and also the Indian
market. This will also help them to carry out their further study.

LIMITATION OF THE STUDY


The statistical data were taken for the last five years i.e. form 2008-09 to 2012-13, which may not generalize the
results. Hence a large sample size (secondary data) can maximize the reliability and generalizability of the results.
The sample size of the population being tested should be large enough to increase its validity i.e. An appropriate sample
size is needed to conduct the test of significance.

www.tjprc.org

editor@tjprc.org

32

Kalpana Agrawal & Abhishek Gokharu

REFERENCES
1.

Bhandari (2010). GLOBAL CRISIS, ENVIRONMENTAL VOLATILITY AND EXPANSION OF THE


INDIAN LEATHER INDUSTRY Retrieved on 11th April 2014 form http://www.studymode.com/essays/IndianLeather-Industry-2010-844141.html

2.

(2011, 11). Indian Leather Industry 2010. StudyMode.com. Retrieved on 15 April 2014, from
http://www.studymode.com/essays/Indian-Leather-Industry-2010-844141.html

3.

Sharma and Dietrich (2004). The Indian Economy since Liberalization: The structure and composition of
Exports and Industrial Transformation(1980-2000).

4.

dipp.nic.in/English/Schemes/ILDP/guidelines_LeatherScheme_21March2012.pdf

5.

http://www.iilfleatherfair.com/leatherfair/chennaileather/about_leather_industry.php

6.

www.eximbankindia.in/

7.

http://commerce.nic.in/eidb/default.asp

8.

http://www.scholars.google.co.in

9.

http://www.shodhganga.inflibnet.ac.in

10. http://www.leatherindia.org
11. http://www.rbi.org
12. http://www.google.co.in

Impact Factor (JCC): 4.9926

Index Copernicus Value (ICV): 3.0