Leather Industry is categorized into segments such as finished leather, Footwear, Leather Garments, and Goods & Accessories Sector including Saddlery & Harness. India is second largest producer in both leather footwear and leather garments segments. In terms of exports the Country stands third in leather garments and fifth in leather goods & accessories sectors.

India continues to stand at eighth place in the world leather exports with 3% of part in the total export earnings. China and Italy enjoys the largest market share of about 28% and 14% in world exports respectively followed by Hong Kong, Germany, France, Brazil and Belgium. During the first seven months of the current FY 2012, export of leather & leather products have registered a positive growth in rupee as well as in dollar terms. Further, exports of different categories of leather products have also recorded positive exports growth.

Indian leather products sector witnessed a growth of 27.32% in their exports accounting to Rs 125604.91 million for the period April-Oct 2011 while in USD terms it has shown a 27.33% growth aggregating to USD 2741.48 million. The data for the above graph is culled from Ministry of Finance up to October 2011. For December 2011, we have taken the daily RBI reference rate of November and December 2011 and averaged it for the whole month.

During November 2011, in value terms the growth in production of tanned or chrome skins and leathers accelerated from 13% in October to 27% on y-o-y basis while increased by 10% to Rs 84.7 crore on monthly basis in November after declining by 2% in previous month.

Like wise, the growth in leather garments production improved from 35% in October to 36% in November on yearly basis but declined by 8% sequentially to Rs 30.3 crore in November after growing at 8% in previous month. The production of major leather items such as bags, purses and wallets improved by 18% to 6,71,613 in numbers in November followed by 10% rise in October on yearly basis and remained almost flat on sequential basis from last three months.

The Indian leather & leather products is in demand for its quality, finish and designs. Further, the demand is expected to grow considering the change in life style and affordability for the Indian leather industry. Players that regularly review their product range and adapt to changing requirements of the customers are better placed. Value engineering and improving productivity besides reducing operating costs are the key.

The on going sovereign debt crisis in UK, Spain and Italy (accounting about 30% to the total exports) can depress the growth of the Indian leather exports into these regions in the short to medium term. But, thanks to the recovery in US economy, which might show some positive impact in the industry. Moreover, the strong dollar appreciation and sensible prices would help the industry to realize better earnings for their products. Relatively, the domestic demand is fairly good, though there is risks to the pace of growth, considering sharp deceleration of the economy.