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 sectors while in 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.

The leather and leather products exports for the first eight months ended FY12, i.e., April-November 2011 touched USD 3092.02 million as against the export of USD 2398.32 million in the corresponding period last year, registering a positive growth of around 29%. While, in rupee terms, the export touched Rs 143613.68 million during April-November 2011 against Rs 109655.4 million, registering a positive growth of around 31%.

In the ten months ended FY2012 Germany topped with 15% of the India's leather product exports, followed by UK 11.44% and Italy 11.40%. These three countries together accounts for nearly 38% of India's total leather products. Among the major countries, except Germany and China the other countries lost their market share in the Indian leather exports. U.K lost its market share by 152 bps, Italy by 19 bps, France by 84 bps, Hong Kong by 176 bps compared to the corresponding period of last year due to Euro zone debt crisis.

The leather availability is less during the summer season when compared to the rainy and winter seasons. As a result, the leather prices during the summer season generally picks up due to scarcity of leather in quality as well in quantity terms. Therefore, the leather prices are expected to remain stable till the early March 2012 and are likely to move north side from mid of March 2012 with the beginning of summer season.

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. Amidst, the leather industry exports are expected to show a significant growth in rupee terms in December 2011 on the back of continued rupee depreciation. Since January 2012, there has been massive appreciation of Indian rupee, which coupled with sluggishness in leather exports to UK, Italy and France is a cause for concern. The risks to global economy and the deceleration in emerging economies like India, China also adds to concerns. These factors have rubbed off the sheen for the Indian leather industry. But the sector is poised for medium term growth, considering its initiatives to move up the value chain, and its plans to expand its geographical reach.